If you have seen any news source at all in the last day, you have seen/heard something about the new Apple devices. Of course, there are several things that people will be looking forward to in the new devices – slimmer design, larger screen, better camera features, more space, etc, but there are two key things that I have been looking forward to.
One of them was the health aspect of the devices and the new iOS. I had really wanted to see how they implemented these new health features and what the Apple Watch could bring to the table for running activities. But, that is a product for another discussion.
The other thing I was really looking forward to was to see how Apple planned on implementing their payment processing system. I wrote last week about some of the things that could be involved in it, but now we have the (almost) complete picture of the new Apple Pay system.
Basically, the hardware aspect uses NFC (near field communication) to communicate with the payment terminal and then you use Touch ID to pay. Apple is using tokens (that expire after each use) to allow for tight security on your payment information. So far, discussion about the payment options have referenced credit cards, debit cards, and gift cards. To bring your payment information into Apple Pay, you can simply take a photo of the card and the pertinent information and Apple will then run a verification check with the issuer to be sure that it is indeed your card.
Greg (FrequentMiler) has written much about the 5X everywhere possibilities that had existed so easily in days of $500 Visa gift cards (at office stores) using Chase Ink cards (this link will take you to Frequent Miler’s page where you can apply for the Chase Ink cards). Thanks to office stores dropping the $500 cards and Bluebird becoming more difficult to load, the 5X everywhere is not as easy to implement as it used to.
But, with the new Apple Pay, one thing that I have yet to see is whether Apple will allow you to use your iTunes credit for purchasing. Apple will use your default credit card from iTunes for payments with Apple Pay if you choose. What I wonder is if they will allow you to designate to use your iTunes credit instead.
There is a big part of me that says “NO” but I am still curious if that would be something that Apple might allow. They are already using their own payment system with this so it would cost them nothing from the aspect of credit processing fees to do it and it would simply debit your iTunes account when you make a purchase.
The 5X everywhere angle that could come into play with something like this is that you can purchase iTunes gift cards at office supply stores at face value and often with a discount! In fact, iTunes gift cards are available from time to time at a great discount – most recently, eBay had them for 15% off. With the typical 20% off when Office Max puts them on sale, that would allow for 5 Ultimate Reward points per dollar plus a huge discount on iTunes gift cards.
If Apple were to try to leverage their own system even more and allow iTunes credit as a payment method, I am sure that we will not see discounts on gift cards anymore. But, the 5X would still exist and would allow you to not have to pay a fee to even purchase it.
Just A Dream?
While I am a tech-lover, I do not really know the technical ins-and-outs of the tokenization type system that Apple will be using for their payment system. I also do not know all of the credit ramifications as to whether it would even be allowable to use iTunes credit as a legal payment tender (even though it was purchased and loaded, similar to a prepaid debit card).
I do know that Apple wants to make people be more deeply vested in their ecosystem. By making their own payment source at some point with an added incentive (like their own rewards program), that could come to pass. Even if they charged a 1% fee on using iTunes credit for payment would still allow us to get some great points at a decent price (if you are buying iTunes gift cards at office supply stores with your Chase Ink card – 5% in rewards will be earned).
On the positive side, there is an unknown amount of people who do not have a credit card tied to their iTunes account. Believe it or not, there are still many people that do not have a credit card. By allowing people the option to use their iTunes credit with the Apple Pay system, they would still able to bring all of their customers online with the system. Again, this would probably necessitate a small processing fee but as long as it was not anywhere near the 5% we can earn in points, it would still work in our favor.
What Else Might Be Possible?
Make no mistake – Apple did not invent the mobile payment system nor are they the first to use NFC for payments. The NFC system has been in use for a while now by Google so I am not some Apple-centric consumer that thinks Apple invented everything.
But, what is pretty undeniable is that Apple historically has done a good job in the partnership department. Some of the partnerships have not been as well received as Apple may have hoped (remember Rupert Murdoch’s The Daily iPad-only newspaper?), but the partnerships they make normally allow for widespread acceptance of Apple initiatives. By Apple already bringing the banks and several large retailers onboard, it will allow Apple Pay to have a good leg up in the mobile payment processing arena.
With all of that, what might be possible down the road with Apple Pay and our desire to earn more miles and points by spending? Do you think it might be possible that Apple will allow iTunes credit to be a valid payment choice?
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