Technology Desk: iPhone manufacturing technology company Apple is preparing to launch its digital payment service Apple Pay in India. According to the report, the company may launch Apple Pay in India by the end of September or October. However, UPI payment support will not be available in this service in the initial phase. In the first phase, select credit and debit cards from global payment networks like Visa and Mastercard can be used through Apple Pay.
The entry of Apple Pay in India may give the company an opportunity to make a place in the country's rapidly growing premium credit card segment. Along with this, the fees received on every card transaction will be a source of potential earning for Apple. According to the report, Apple has been in talks with major credit card issuing banks of India for the last few months. These discussions include issues like transaction fees and its distribution.
During the initial launch of Apple Pay in India, users will be able to add their Visa and Mastercard networked credit and debit cards to Apple Wallet. For this, the company is preparing to use the same payment framework which it uses in other global markets.
After saving the card in Apple Wallet, users will be able to make payment by bringing their iPhone or Apple Watch near the contactless PoS machine present at the store. For this there will be no need to swipe or insert the card in the machine.
Payment will be done through NFC (Near Field Communication) technology. That means the user will bring his device near the contactless payment terminal and the transaction can be completed through the device.
The biggest shortcoming of Apple Pay's initial service in India will be the lack of UPI support. To make payments through UPI, Apple will have to complete some regulatory and technical steps to India's payment system.
To start UPI service, Apple will have to get approval from National Payments Corporation of India (NPCI). Apart from this, the company will have to partner with a sponsor bank to route UPI transactions.
This is the reason why Apple Pay may be kept separate from the UPI based payment system in the initial launch. This means that initially users will not be able to make UPI payment directly from their bank account by scanning the QR code of a shop using Apple Pay like PhonePe, Google Pay or Paytm.
Apple Pay users will need to add their supported credit or debit card information to Apple Wallet. After the card is added, there will be no need to remove the physical card at the time of payment.
iPhone users will be able to make contactless payments by tapping the device on the PoS machine. Payment can also be made in a similar manner through Apple Watch.
Apple Pay uses the device's security features to authenticate payments. Depending on the model of iPhone, the user can authorize the transaction through Face ID or Touch ID.
A major difference between the initial Apple Pay service and existing UPI apps will be QR code payments. In apps like PhonePe, Google Pay and Paytm, the user can make UPI payment by scanning the QR code installed at the shop.
It has come to light that the facility of such QR based UPI payment is not available in the initial version of Apple Pay. It will be used mainly for NFC based contactless card payments.
The initial model of Apple Pay will be quite different from the existing UPI apps in India. On platforms like PhonePe, Google Pay and Paytm, the user usually makes payment directly from his bank account through UPI. This may require scanning QR code or using UPI ID/other UPI options.
In the initial model of Apple Pay, the basis of payment will be credit or debit card. The user will save the card to Apple Wallet and make the payment by tapping the iPhone or Apple Watch at the PoS machine.
Due to the use of NFC technology in contactless card payment, there will be no need to scan QR code for every transaction. Biometric security features like Face ID or Touch ID can be used on iPhone to authorize payments.
There is also a difference between the methods of UPI based QR payment and NFC based card payment. Making payment by scanning QR code from UPI app usually requires an internet connection.
Contactless card transactions will be done through NFC at PoS in Apple Pay. Therefore, the payment experience will be different from QR based UPI payments and the user will not need to open the payment app and scan the QR code every time.
The company is in talks with major credit card issuing banks in the country to launch Apple Pay in India. An important part of the discussion is said to be to the fees received on every transaction and its distribution.
Apple Pay's global business model involves card networks, banks and different parties involved in the payment ecosystem. In India also, the company will have to make partnerships as per the local banking and payment system.
The launch of Apple Pay in India may give the company an opportunity to reach out especially to premium credit card users. For customers using iPhone and Apple Watch, the facility to make contactless payments by adding the card to the Wallet will provide a new option.
With an initial focus on Visa and Mastercard cards, Apple Pay will be primarily accessible to cardholders whose cards are issued on the respective global payment networks.
Despite not including UPI in the initial launch, Apple Pay service in India may expand further. If Apple gets NPCI approval and necessary banking partnership, there will be a possibility of linking UPI with Apple Pay in future.
With the arrival of UPI support, iPhone users will be able to make UPI based payments directly from Apple's device and the use of Apple Pay will not be limited to card payments only. At present, the focus of the initial launch has been revealed to be on Visa and Mastercard based card payments.
