Apple's Tiny iPhone Makes Room for Apple Pay's Global Expansion

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Apple's newest iPhone, a throwback to the smaller models it sold in previous years, is designed to maintain Apple Pay's momentum as it lands in new regions.

Previously available only on the newer iPhone 6 models, Apple on March 21 introduced a new 4-inch iPhone SE that will carry the Near Field Communication chip and secure element needed for payments. The phone will include the TouchID fingerprint biometrics of current iPhone models to authorize users and enter the Wallet app to initiate transactions, said Greg Joswiak, vice president of iOS and iPhone marketing, during the company's annual presentation in Cupertino, Calif.

Though many reports show that Apple Pay has had lackluster adoption in the U.S., Joswiak expressed optimism about the Apple wallet's prospects overseas.

"We recently launched Apple Pay in China, where the response was absolutely fantastic," Joswiak said. "We had more than 3 million payment cards added in Apple Pay in the first 72 hours alone [of the service being available]."

Apple introduced the Apple Watch a year ago at this same presentation, introducing Apple Pay capabilities on the new smartwatch.

Apple CEO Tim Cook did not reveal any new statistics related to Apple Pay or its use relevant to Apple Watch. He also did not provide an overall update on Apple Pay use or merchant adoption.

Two months ago, Cook said Apple Pay use had spiked in the second half of 2015 at a growth rate 10 times higher than the first half of the year, but Apple has never delivered specific Apple Pay usage numbers.

Even though Apple Pay didn't get a lot of stage time in this presentation, the company is likely to keep singing its praises moving forward.

"When Apple first energized the emerging markets for smartphones and tablets, there was huge fanfare, driven by a massive wow factor," Toffer Grant, CEO of New York City based Pex, a provider of prepaid expense card solutions for small businesses, stated in an e-mail to PaymentsSource.

"Payments technology, as ubiquitous as it is, doesn’t inspire that sort of wow factor. So, in order for Apple Pay and its rivals to be successful, there has to be a sustained effort to communicate the value," Grant said.

Merchants need to understand the benefit of mobile payments on their bottom line, and consumers need to be able to use it reliably, consistently and easily, Grant added.

"Once that happens, you let the momentum carry the technology," he said.

On the topic of consumer privacy, Cook opened the event by addressing the company's ongoing court battle with the U.S. Federal Bureau of Investigation regarding access to data on the work iPhone used by the San Bernardino, Calif., shooters.

The question of data security also resonates with Apple Pay users wanting to be comfortable that no one else has access to their payment card credentials or transaction histories.

"I am humbled and deeply grateful for the support we have received from Americans across the country," Cook said, referring to those siding with Apple's view that the company should not be forced to develop a version of its operating system with "backdoor" access for government agencies.

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