Your smartphone: The debit card of the future.

AuthorShekhtman, Lonnie
PositionBusiness

Byline: Lonnie Shekhtman

Though digital wallet technologies have been available for years, the launch of Apple Pay in October has finally pushed banks and credit unions in Massachusetts and beyond to prepare for the inevitable: People using their smart phones to pay at checkout counters, instead of their credit or debit cards.

In anticipation, about 100 financial institutions nationwide have been signed up for Apple Pay, which allows people to link their phones to debit or credit cards, and use them to pay for things at the checkout counter. New banks join the list every day, and hundreds are waiting to get set up with the service.

"If we could have flipped the switch immediately when Apple announced Apple Pay, we'd be there,'' said John LaHair, public relations manager for Digital Federal Credit Union in Marlboro. The credit union will begin allowing members to link their debit and credit cards with Apple Pay by April, about six months after signing an agreement with the company.

Apple's new in-store payment method works only with the iPhone 6, and will work with the Apple Watch when it's released this spring. Apple Pay can also be used within certain apps, like Target, Uber and Ticketmaster, through the i-Phone 6 and the iPad Air 2, and iPad mini 3.

After linking a credit or debit card with Apple Pay, people simply must wave their phones in front of a special reader at a retail checkout counter to make a payment. No need to open an app or even your phone display. A slight vibration of the phone confirms a transaction.

For now, nearly 50 national retailers have upgraded their payment terminals to accept Apple Pay. They include Walgreens, Chevron, Panera Bread and Petco. Many more are expected to convert.

"The thing that's going to drive Apple Pay is the retailers,'' explained Brad Fenn, electronic banking technology manager at UniBank, based in Whitinsville. Many have been hesitant to convert, because they're pushing their own mobile payment system or, for the small retailers, they don't see the value in buying a new payment device, said Mr. Fenn.

But things are expected to change this fall, because retailers will need to convert their swipe terminals to ones that accept cards with embedded security chips, called EMV, already widely used in Europe and Asia, and already distributed by some banks to their customers here.

The chips -- a gold square atop the card number -- replace the magnetic stripe on the back of cards to prevent counterfeit...

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