Apple Pay

payux Allgemein, Technology Giants, , ,

Apple Pay Fact´s

Apple Pay is Apple’s new mobile payment service, which lets iPhone 6, 6 Plus, iPad Air 2, mini3 , and Apple Watch owners make payments with their mobile devices. It has been commercially  launched in the US in October 2014.

  • NFC
  • Touch ID for Security
  • Use of an embedded secure element
  • “Tokenization” for secure transactions
  • Accepted at 200,000 Locations in U.S., Visa, MasterCard, AMEX and all major US Banks are participating
  • Supported by iPhone 6, 6 Plus, Apple Watch, I Pad Air 2, mini3

 

Figures

  • 1 Million debit and credit card registrations within the first 72 hours
  • Supports Cards that represents some 90% of the credit card purchase volume in the US
  • Wells Fargo is paying 20$ to people to sign up for Apple Pay

 

In the first article „Mobile Payments Today“ I refered to the different mobile payment types and the mobile payment market in general. At the end of the article I wrote some words about the new payment system of Apple called Apple Pay.

This  article will look more into what Apple Pay is and how Apple Pay works.

Tim Cook started the Apple Pay Keynote segment in September with the following words: “Our Vision is to replace the “physical” wallet……and we are going to start by focusing on payments”. He also said that Apple Pay will “forever change the way all of us buy things”. In this keynote he outlined and focused on the user experience, simplicity, and security of Apple´s latest service.

 

But what it is? And why is Apple offering a new payment system that Financial Institutions, Payment Schemes or companies like PayPal could offer?

There are several arguments why Apple is taking the lead in this area. First of all Apple is one of the pioneers in the area of smartphones and tablet computers.  Together with Google´s Android operating system, they are without a doubt the market leader in this business. Furthermore they also have a huge app store which they can use to deploy new services within a very short time. And last but not least they have iTunes. More than 800 million users worldwide have stored their credit or debit card data in iTunes and all of these users can be now used to process payments with Apple Pay.  And we also should not forget that Apple is the most valuable brand in the world cashing in on its charisma.

 

All these arguments mentioned have been a good starting point to develop Apple Pay. With their charisma and market power Apple also convinced Financial Institutions, Payment Schemes and Retailers to participate in their approach. With this huge success more than 200.000 participating US Retailers, all major US Banks, and all three Payment Schemes are supporting Apple Pay. Right now Apple Pay is only available in the US but more countries will follow in 2015.

Features

Apple counts on NFC as the transmission standard to communicate with Point of Sale terminals. To ensure a secure transaction a Tokenization service offered by Visa and MasterCard is used to encrypt the payment credentials. These credentials will be stored on the embedded secure element which is physically located in the mobile device.

Currently to authenticate at a store we are using our signature or our PIN code. With Apple Pay we just need the Fingerprint TouchID sensor for the authentication process at the Point of Sale.

There are three different methodologies to use Apple Pay. One option is to pay in store contactless, the other two options are online and in app payments. For all three options, you will have to authenticate with TouchID.

You are also able to set your shipping and billing address as default, this will help you to automatically fill in your shipping or billing address if needed.

With the lost or stolen function you can also use with iCloud you are able to block your payment cards in case you lose your mobile device.

Set Up

The first card you load into Apple Pay is your default card; you can either simply scan a debit or credit card or use the existing ones in iTunes.  Due to security reasons, Apple will not store your credit or debit card numbers on the device. Instead, Apple is generating a specific number which will be stored in the secure element.

After the set up, you are able to see your cards in the Passbook App with all the other loyalty cards you have already added.

Conclusion

In my opinion Apple made a clear statement to rely on NFC as transmission standard in the first place. Furthermore they created an outstanding user experience and combined the needs of customers, financial institutions and retailers. They all can take an advantage of this payment “revolution”.

With this launch, Apple also showed  great creativity and they also underlined their ability to create an outstanding user experience for their customers.

It will be interesting to watch the reaction of other market participants like Samsung, Google, Banks and, mobile network operators.

Leave a comment