How Apple (NASDAQ:AAPL) will succeed where others have failed.

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By Thomas Copeland on September 13, 2014 Intl News

A day prior to the ApplePay (NASDAQ:AAPL) announcement, Pymnts.com cited Josh Silverman, an Express Executive pointing the absurdity of mobile wallets. According to him how much less effort does it take to swipe a mobile phone than a card or how much time will one save while doing so. Although I agree with his statement yet I also believe that he is missing the actual point, and is totally unable to look into the depth of the matter.

Google (NASDAQ:GOOGL) wallet, Amex wallet amongst others previously failed because of the fact that they tried to amend the card swipe with a phone scan or tap that is almost the same functionality. Simply put, there is no easier way to swipe a card because it is not that difficult in the first place, nor is it inconvenient. Therefore replacing the card swipe with something else does not really make sense.

The game changer however is the hot issue of security here. Security is an essential part for the retail industry, like Michael’s (NASDAQ:MIK), Home Depot (NYSE:HD), Office Max (NYSE:OMX), and Target (NYSE:TGT), etc. being recent targets; everyone is aware of the importance of security and the dangers associated with it in terms of payments, yet somehow it was overlooked previously.

Security is the main ingredient in ApplePay (NASDAQ:AAPL) that might lead to the replacement of plastic cards by ApplePay (NASDAQ:AAPL). ApplePay (NASDAQ:AAPL) is dejecting the security code as well as the card number along with the swipe from the payment method which is genius.

NPR explanation:

Google (NASDAQ:GOOGL) stores credit card information in its wallet but Apple (NASDAQ:AAPL) does not do that at all. ApplePay (NASDAQ:AAPL) keeps with it an exclusive ID that’s encrypted with information inside a locker within the phone. When you need to pay, the phone engages with the bank and the bank provides it with a temp token. The seller gets the token from the mobile and the purchase takes place. The token is for one time use only which makes it safer even if it gets stolen somehow.

In today’s era of Networked Economy, it is pointless to risk sensitive consumer card and bank info every time you need to make a payment. In the context of B2B payments the same thing holds ground. Every electronic ACH payment should not require bank information. It might not be as big a deal as consumer card data but it still involves risk.

ApplePay (NASDAQ:AAPL) and AribaPay are both reducing the risk factor for consumers and B2B payments simultaneously by using non-sensitive alternate proxy numbers at the time of the purchase. Obviously the security has been an issue in terms of payments earlier on, which is why the requirement of an alternate payment method is a dire need currently.

Apple’s (NASDAQ:AAPL) idea of using an alternate proxy number in place of the actual information helps in keeping the information hidden from the hackers and therefore is a great use for the Networked Economy and can be a future game changer and is a matter of time until consumers begin to recognize its importance…