Cengage Advantage Books: Business Law Today, The Essentials 11th Edition by Roger LeRoy Miller

Exercise 1

ADAPTING THE LAW TO THE ONLINE ENVIRONMENT
Pay with Your Smartphone
A payment revolution is going on right now. Starting in 2009, customers at certain Starbucks locations in New York, San Francisco, and Seattle could use an iPhone app to pay for their lattes. By 2015, some 7,500 Starbucks locations were accepting payments from all types of smartphone- based operating systems. That same year, smartphone point-of-sale payments in the United States reached $4.2 billion. Some experts estimate that the total for 2016 will be $30 billion.
Apple Enters the Mobile Payments Arena
Apple, Inc., provides its own mobile payment and "digital wallet" service, called Apple Pay. Owners of Apple's iPhone 6, iPhone 6 Plus, iPad Air 2, and iPad Mini 3, along with its Apple Watch, have access to the service. Apple Pay enables these devices to communicate wirelessly with special point-of-sale systems using near field communication (NFC) technology. A person using an iPhone holds it close to the point-of-sale terminal and authenticates the transaction by holding a fingerprint to the phone's Touch ID sensor. Customers' payment information is kept private from the retailer. The system generates a "dynamic security code" for each transaction.
Google and Samsung Provide Competition
Google created the Google Wallet wireless payment system even before Apple Pay was launched. Then, in 2015, Google and the mobile payments company Softcard contracted with AT T, T-Mobile USA, and Verizon Wireless to preinstall Google Wallet in smartphones sold by those three companies.
Google's Android system is used on most Samsung smartphones. Samsung, a fierce competitor of Apple, announced in 2015 its purchase of LoopPay, a mobile payments startup. Also in 2015, Samsung created a direct competitor to Apple Pay called Samsung Pay. It was designed to work with existing magnetic-stripe credit-card machines as well as the newer NFC technology.
Linking Digital Wallets to Other Apps on a Smartphone
The ultimate goal in this modern payment system world is a link from a digital wallet to another app within a single smartphone. For example, Google allows its Google Wallet to link to its Google Offers, which is a discount- deal app. Mobile payment systems will eventually be tied to rewards programs and special offers at individual stores.
Critical Thinking
Does having a digital wallet in an iPhone, Android-based smartphone, or other smartphone entail more security risks than carrying a physical wallet Explain.