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Will iPhone X change payments

The new iPhone X has been presented as groundbreaking, promising to revolutionize Apple smartphones. What impact will it have on mobile payments?

ARKit

AR view, an augmented reality tech already used by retailers such as Amazon, allows customers to visualize an item, for example a piece of furniture, in their present environment.

In its press release, Amazon announced the introduction of the AR view for customer using the Apple version of App with iOS 11 on iPhone 6S or newer models. The company underlines how this new technology will allow customers to “make better shopping decisions by allowing them to visualize the aesthetic and fit of products in their own living space.”

Face ID

With the introduction of facial recognition, replacing the fingerprint sensor on the iPhone X, Apple had to rethink how it handles a lot of common interactions, especially payment.

During Apple’s September 2017 keynote, Phil Schiller, the company’s senior vice president of worldwide marketing explained: “Face ID also works with Apple Pay, you look at iPhone X to authenticate and hold it near the payment terminal to pay”. The chance of a random person being able to unlock someone else’s phone with Face ID are 1 in a million. Nevertheless, Apple and various experts recommends using a password to protect their personal information.

Many third-party financial and security apps already work with Face ID, for example Mint, 1Password or E-Trade.

Mobile banking will also be impacted by Face ID. When Touch ID was made available to third parties, mobile banking app providers were quick to allow customers to authenticate themselves this way. Douglas Hartung, senior director of global software innovation at Diebold Nixdorf, stated that it things should be expected to be the same with facial recognition. In the United Kingdom, the Bank of Scotland  and Nationwide  were recently the first banks in the country to update their mobile apps to support Face ID. In the Netherlands, ING was also quick to offer Face ID authentication on their mobile banking app.

P-to-P feature

The new P-to-P feature can draw funds from Apple Pay, sending money to Apple Pay user and non-users alike. When sending money to someone who isn’t enrolled in Apple’s mobile wallet, the funds will be loaded on a virtual Apple Pay cash card (a prepaid account from Green Dot).

iMessage money transfers

Apple’s person to person service (P-to-P), has been imbedded directly in its messaging app with iOS 11.

Money can be send directly through the Message app, being then loaded on the user’s Apple Pay cash card. P-to-P also comes up as an autofill suggestion when typing. For example, iMessage might suggest sending the funds via Apple Pay if a friend mentions needing an amount of Money.

P2P money transfer is not a new concept. Apple faces a strong competition on this market, with the likes of Circle, PayPal, Venmo, Square, Google Wallet and Facebook.

User location

Apple introduce a change to location data with iOS 11: application monitoring the user’s location will cause a bright blue bar to be displayed on the screen.

The general idea is to help iPhone owners realize when their location is being tracked, verifying the legitimacy of the app doing so, or avoiding battery drain.

Location-based marketing might suffer from this, as consumers might choose to turn off the apps tracking their location. However, it is more likely that retailers and banks chose to communication more clearly the benefits of location data.