Tony Mecia is a business journalist who writes for a number of trade and general-interest publications. He writes “Cashing In,” a weekly column about credit card rewards programs, for CreditCards.com
Dear Cashing In,
I read that Apple’s new iPhone will let you use its facial recognition features for Apple Pay, which sounds pretty cool. I have never used Apple Pay. But is it a good idea to use it? And what’s the best way to use reward cards with Apple Pay? – Todd
Apple unveiled its latest luxury electronic devices, including three new iPhones and a new line of Apple Watches, on Sept. 12, 2017. The biggest hype, though, was reserved for the top-of-the-line iPhone, called iPhone X (“iPhone Ten”), which starts at a whopping $999.
The feature that is special with the iPhone X is facial recognition. This will allow users to do a number of different things, including unlock their phones just by looking at them, communicate with each other through animated emojis and, yes, confirm payments with Apple Pay. Current iPhones that have Apple Pay use fingerprint recognition to verify purchases.
(Incidentally, some Android phones have had facial recognition for some time, but Apple says its version is more advanced and better able to distinguish between different users.)
Apple created a similar amount of buzz when it launched Apple Pay in September 2014. At a presentation, CEO Tim Cook showed a photo of a wallet stuffed with cash and credit cards and proclaimed, “Our intention is to replace this.”
Apple is not there yet. While it has made strides in the past three years, Apple – like many other companies that offer so-called mobile wallets – has not been able to get retailers on board. Last year, Apple said that 35 percent of U.S. retailers accepted Apple Pay.
Using an iPhone can be a convenient and secure way to make credit card payments – if you don’t mind not being able to use it at two-thirds of stores. For now, you still have to carry both your iPhone and plastic cards when out shopping.
As far as Apple Pay and credit card rewards, there’s not much of a secret to unearth. Apple Pay is merely the mechanism by which customers use credit cards at a retailer’s payment terminal. The iPhone communicates the card information to the terminal, so it works just as paying by an actual card.
With rewards, you’ll want to make sure you are using the right card at the right retailer. For instance, if you have a card that gives you 3 percent back at grocery stores and a second card that gives 3 percent back at gas stations, you’ll want to be sure to use those cards at the right places to earn the most rewards.
Some cards are starting to offer extra incentives to use your mobile wallet when checking out. For example, the no annual fee Wells Fargo Cash Wise Visa card is offering new customers 1.8 percent cash back for the first 12 months when using Apple Pay or Android Pay (as opposed to 1.5 percent cash back when just using the plastic in your wallet). Also, the high-end U.S. Bank Altitude Reserve card offers 3 points per dollar spent with a mobile wallet app instead of the normal 1 point per dollar spent that the card earns with everyday purchases.
Apple Pay can store information on up to eight cards, which seems as though it would be plenty for that purpose. Ordinarily, you have to designate a default card that Apple Pay uses. That is one of the most convenient features: You don’t have to press a bunch of buttons to pay. The phone and terminal interact with each other without your having to activate the phone. However, if you want to use a card that is not your Apple Pay default for the purposes of maximizing your rewards, you can do that in a few steps on the phone.
With the new phone, things will work mostly the same, but with facial recognition to validate the transaction instead of a thumbprint.
The technology publication TechCrunch described the process like this: “You double-tap the button on the side of the iPhone, look at the iPhone X so it recognizes you, then hold the device near the payment terminal to complete the transaction.”
Apple Pay also works with the Apple Watch.
For now, it seems like a fun way to pay that has no downside to card rewards. But Apple Pay is not taking over the world – at least not yet.
Meet CreditCards.com’s reader Q&A experts
Does a personal finance problem have you worried? Monday through Saturday, CreditCards.com’s Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.