MIAMI — As JetBlue and airport concessions operator SSP America became among the first to use Apple Pay in the airline/airport space, an analyst sees the possibilities for travelers, but notes that other options are already available. Apple Pay allows iPhone users to do things including paying with Touch ID and paying for purchases within existing apps.
JetBlue says it’s the first major domestic carrier in the U.S. to accept Apple Pay in the sky for thing including food, beverages and even a seat upgrade. And SSP American currently accepts Apple Pay at its quick-serve restaurant locations at Sacramento International Airport, JFK Airport and Phoenix Sky Harbor International Airport.
David Coher is a principle of reliability and cybersecurity for Southern California Edison, one of the nation’s largest electrical utilities and an attorney. “Apple Pay is a good pay vehicle option for airlines, airports and others. It provides an additional convenience for customers, making it easier for them to buy, and it provides added security, for customer cyber safety,” he said. “In addition, it takes advantage of certain customers’ strong preference to pay in this manner. Allowing payments by Apple Pay can have a benefit for an airport or airline’s image as it presents the business as on the ‘cutting-edge’ of technology.”
Apple Pay digitizes the payment process by storing a user’s credit card information, from a traditional credit card account in the Passbook app. “Upon payment, Apple Pay requires a secure method of identity verification, either a fingerprint on the iPhone’s or iPad’s Touch ID or a special PIN-like code, in the case of the Apple Watch,” said Coher. “Upon confirmation of a user’s identity, the Apple Pay service generates a dynamic security code. The code is sent, by the user’s iPhone, or iPad, or Apple Watch, to the NFC (Near Field Communications) antenna on the point of sale terminal.”
Airlines, airports, and others who wish to accept Apple Pay will need to work with their bank or credit card processor to ensure that they can accept the payments, said Coher. “In addition, they will need special equipment. While virtually any terminal with an NFC antenna will work, vendors will need one to receive the payments,” he said. Some examples of formats that utilize NFC are Visa’s PayWave, MasterCard’s PayPass and AmEx’s ExpressPay; any of these terminals should be able to receive Apple Pay payments, he added.
“Depending upon the business and its relationship with its bank or credit card processor, this may be an inexpensive proposition, for a few new Point of Sale terminals, a.k.a. credit card machine, at a few store locations,” he said, “or a very expensive proposition for an airline to provide new equipment for every single plane in its fleet.”
Customers will need the latest model of Apple’s products, including the iPhone 6, iPhone 6 Plus, iPad Air 2 and iPad Mini 3. “When the forthcoming AppleWatch is released, those with an iPhone 5 (or 5c or 5s) will also be able to pay with ApplePay,” said Coher.
Airlines and airports should consider adding Apple Pay for customer preference and convenience, said Coher. “Just as businesses need to adjust to changing customer preferences for products and services, businesses need to adjust to customer preference in form of payment,” he said. “The acceptance of different payment formats is a customer service issue.”
But Apple Pay does not expand the field very much, said Coher, since it allows for payments to be made by customers at businesses that already accept credit cards. “There may be some added convenience as customers are already likely to have their phone in their hands, as they move through a terminal,” he said. “But, the customer still has to ‘do something’ with the phone to use it to make a purchase.”
The next frontier in convenience will be enabling a transaction without requiring a touch or a code, said Coher. “This may be possible with the Apple Watch, but we’ll have to see how this works in practice when the device comes out,” he said.
Currently, Apple Pay can only be used in the United States, said Coher. “I understand that it will be expanded to Canada next month, but that still leaves the rest of the world out of the game for now,” he said. “Finally, remember that Apple Pay is not the only game in town. Google just recently purchased SoftCard, which will likely make its Google Wallet platform very competitive.”