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Good Luck Making 2015 the 'Year of Apple Pay,' Tim Cook

Apple needs to give shoppers better reasons to use Apple Pay.

Vjeran Pavic for Re/code
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

Apple’s blockbuster holiday iPhone sales numbers mean the company’s Apple Pay mobile payments system is now in the pockets of millions, if not tens of millions, of Americans. That’s great news for Tim Cook.

But there’s a ton of work yet to do if Cook hopes to make 2015 the “year of Apple Pay,” as he enthused on an earnings call today.

First, Apple needs to continue to sign up merchants to accept Apple Pay, so that shoppers don’t have to guess where they can use it. Right now, some of the country’s largest retailers, such as CVS, Walmart and Target, refuse to accept Apple Pay in their stores in part because they are backing a competing app called CurrentC. If one of these retailers, or another in the group of retailers backing the competitor app, breaks rank, the whole thing could fall apart. That would be great for Apple. But for now they are giving the appearance of solidarity.

Apple also needs to give shoppers more good reasons to use Apple Pay in stores, other than the cool factor. (The in-app version of Apple Pay is a no-brainer for shoppers, since it’s much easier to use than having to type in payment information on a small screen.) The in-store service would get a big boost if Apple could integrate it with loyalty programs of individual retailers. Alternatively, Apple could attempt to create its own Apple Pay loyalty program. Either implementation would help, and I’d expect one of them to happen eventually.

Lastly, Apple Pay may have work left to do on the security of the system and the process by which banks allow their card holders to sign up for it. As payments security buff Cherian Abraham wrote in a blog post this month, some fraudsters have been able to use Apple Pay thanks to faulty security checks by card issuers. They aren’t hacking the fingerprint identification technology or breaking into the phone to steal card data. Instead, they are getting their hands on stolen card data from elsewhere, and then convincing card issuers that they are the right card holder, enabling them to set up an Apple Pay account.

As Cook said, Apple Pay is still in “the first inning” just a few months after launch. Cook is right to be proud of how his company has created the most buzzed-about mobile payments system ever. And he’s right to be excited that two-thirds of all contactless payments across Mastercard, Visa and American Express are happening via Apple Pay, as he proclaimed on today’s call. All of this before the Apple Watch launches, which could help make Apple Pay even more popular because you won’t even need to pull out your phone.

But now the real work begins.

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