You don’t need Apple Pay. Of course, I could say that about many other products Apple has succeeded in convincing you to love. But with the tech giant’s newest foray into the incestuous morass of mobile payments, Apple is taking on a particularly tricky challenge. (Yes, even more than with its ridiculously elaborate timepiece.)

I’ve long been a skeptic about mobile payments, in case you couldn’t tell. Tech companies and big banks have been trying to make their "digital wallets" happen for years, with little luck. (Just ask Google, and that company formerly known as Isis.) Why construct an elaborate fix to something that’s not broken? Why bother with smartphones and thumbprints and buggy digital scanners at the checkout counter, when you could just swipe a piece of plastic and go?

"The core challenge Apple faces is that buying things with a credit card isn’t nearly as onerous a process as they make it out to be," as The New York Times adroitly summed up this week. And there’s an even better argument for Apple Pay skepticism in Thursday’s Wall Street Journal, which boiled the hurdle for Apple down to numbers.

220,000 versus 9 million. That’s the number of U.S. retailers where you can use Apple Pay starting in October, versus the number of places where you can currently use a credit or debit card. In other words, Apple Pay isn’t going to work at 97.6 percent of the places where you can shop in this country - and retailers aren’t exactly rushing to embrace the newest technology. Best Buy, for example, has installed the digital scanners that its checkout clerks would need to scan your iPhone 6 - but "switched them off in 2011 because the cost of supporting the platform was too high" and "has no plans to change course following Apple's announcement," the Journal reported.

That’s really the crux of the problem for Apple, and Google, and PayPal, and that Isis that President Obama isn’t promising to destroy. You can sell consumers any new kind of technology (or new ballad-rock album, for that matter) if you wrap it up with something they already love and plan to buy. But you can’t control how they use it, if they use it, or indeed if they can use it. Right now retailers are the ones who control how consumers use this kind of technology, and they are far from fully onboard.

Businesses, especially startups, have several reasons to resist upgrading their technology. There’s the cost of installing the new scanners, and the cost of training staffers to use them. There’s the fact that many of the smallest businesses, the food trucks and the startups that rely on Square or Amazon or PayPal to accept credit cards, won’t be able to use Apple Pay. Those systems "aren't equipped to process NFC payments," the Journal wrote, referring to the "near-field communication" technology used to scan the digital wallets on smartphones.

And then there are the potential increased costs to small businesses if Apple Pay takes off. Accepting credit and debit cards is already an expensive proposition for retailers, especially the small ones that don’t have a lot of negotiating power with the big banks and credit card processing companies. Retailers pay, on average, 2 percent of every sale in these so-called swipe fees, which are split between banks, networks like Visa and MasterCard, processors, and sometimes a whole host of other companies. Now Apple is coming in and asking for a piece of the action, too.

Bloomberg reports that banks will pay the tech company a fee for each Apple Pay transaction--cutting into the $40 billion in profits that the banking industry collects from retailers every year. And if the banks and credit card companies are giving up some profits to Apple, how long do you think it will be before they start charging businesses higher swipe fees to make up the difference? That prospect won’t make retailers rush to embrace anything.

So the case against Apple Pay seems pretty easy to make--which isn’t to say there aren’t reasons the technology could eventually take off. The primary ones are security and convenience, though the former is a bit of an awkward conversation for Apple and CEO Tim Cook in the wake of iCloud’s implication in the celebrity photo-theft debacle.

But if Apple can shake that, it might convince both businesses and consumers that its digital wallet could help prevent future data breaches. The iPhone’s fingerprint-only payment access and the "tokenization" feature of Apple Pay are two features that could help stave off the recurring massive thefts of consumer data from retailers.

Tokenization is "a technical way of saying that the merchant never sees the credit card information the consumer is using when buying items using Apple Pay. … Breaches at [retailers like] Target and Home Depot wouldn't happen if the companies didn't have consumer credit card information in the first place," my former colleague Rob Blackwell wrote at American Banker this week.

And then there’s the convenience factor - or, to be clear, the distant but still potentially attainable prospect of the convenience factor. It’s a great prospect. I am not immune to daydreams about the day when I can leave my home with only my phone - no keys, no wallet, no credit card or cash, no subway card, no driver’s license and no work ID needed.

So if the state government and the New York subway system and Apple and the banks and all the places where I want to shop and my office building and my apartment building could work together to get all of that digitized and put onto the iPhone 7 or 8 … I’m in. Skepticism assuaged. I might even wait in line to buy one. But until all of that happens, it’s hard to see Apple pulling off what it does with its best products and turning Apple Pay into something you never realized you needed.

Published on: Sep 11, 2014