The big news in payments these days is Apple Pay™. Rolling out with the new iPhones, Apple Pay is a mobile payment method offered by Apple that leverages Near Field Communication (NFC). Similar to Google Wallet, it gives iPhone® 6, iPhone® 6 Plus, and Apple Watch™ users a contactless way to pay via credit card for retail transactions and in-app purchases. Consumers simply wave their phone in front of the reader to initiate payment. No more carrying a big thick wallet—the cards are in the phone.
How Does It Work?
Like other Apple technologies, Apple Pay is designed to be user-friendly. Consumers enter their credit card number into their device or take a picture of their credit card. Once card data is entered, a device account number is assigned and stored within the chip on the device. According to Apple, “these models contain a Secure Element, isolating card payment credentials from the main processor where the app runs.” If a retailer supports NFC, the consumer will press the iPhone Touch ID Fingerprint Reader. The device account number and single-use security code are then transferred to the terminal to perform the transaction.
In order to implement Apple Pay, merchants will need a payment processor/gateway account. TSYS, Vantiv, and First Data are among early adopters of the technology. In addition, for retail environments, merchants will need NFC terminals. Apple Pay supports Visa, MasterCard, and American Express and credit and debit cards from major issuing banks.
Is It Secure?
Given the spike in data breaches, everyone wants to know about security. Some of the primary security features include:
- No information in the Secure Element chip is viewable by Apple. If information is stolen all that will be accessible is the token.
- Apple Pay uses the Touch ID fingerprint identification system. Apple states this provides two security benefits: fingerprints are unique and the cashier (and retailer) never comes in contact with credit card information.
- Apple Pay uses EMV technology.
As with any merchant environment, there may be infrastructure vulnerabilities if not implemented properly.
Where Can It Be Used?
Many retailers are already gearing up for Apple Pay. Any retailer or app who is participating in the Apple Pay Program can leverage this technology. There are already over 220,000 stores and apps that support Apple Pay today, roughly 5.5% of US retailers.
What do you think?
It’s all about adoption. How soon will you begin accepting Apple Pay? Take our survey: