Apple to Launch Payment Technology

by Harry Sheff

Apple PayApple announced that new iPhone models and the upcoming Apple Watch will have the ability to integrate with users’ debit and credit cards, which will mean consumers can use their Apple devices to pay for products at stores instead of swiping or touching traditional cards. The new technology, called Apple Pay, will be available starting in October.

In-store payments will use a Near Field Communication antenna in the iPhone 6. Users hold a finger on the phone’s Touch ID fingerprint scanner and wave the phone near the existing contactless readers that are becoming standard at retailers. The phone will vibrate and beep to signal a successful transaction. The Apple Pay system will also work with certain phone apps.

Pay with Apple Pay-FEATUREDApple says that Apple Pay is more secure than using an actual card. “Every time you hand over your credit or debit card to pay, your card number and identity are visible,” the company said on its website. “With Apple Pay, instead of using your actual credit and debit card numbers when you add your card, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element, a dedicated chip in iPhone and Apple Watch. These numbers are never stored on Apple servers. And when you make a purchase, the Device Account Number alongside a transaction-specific dynamic security code is used to process your payment. So your actual credit or debit card numbers are never shared with merchants or transmitted with payment.”

The company added that it doesn’t save the details of your transactions.

So far, at least seven major card-issuing banks and three major credit card companies are working with Apple Pay: Bank of America, Capital One, Chase, Citibank, US Bank, Wells Fargo, American Express, Visa and Mastercard. Several others, including Barclays and PNC are expected to make announcements soon.

Brick-and-mortar retailers that will be accepting Apple Pay so far include Macy’s and Bloomingdale’s, Nike, Toys R Us and Babies R Us, Disney resorts and Disney stores, McDonald’s, Petco, Subway, Staples, Walgreens and Whole Foods.

Apple Pay will work on apps from Target, Sephora, Uber, Groupon, Starbucks and several other retailers.

Business Insider noted that instead of following the PayPal model and linking directly to users’ bank accounts, Apple opted to work with credit card issuers—which means that the computer giant decided against effectively becoming a competing credit card company.

Not everyone sees the technology as revolutionary. In a snarky New York Times column headlined, “Apple Pay Tries to Solve a Problem That Really Isn’t a Problem,” Neil Irwin writes, “The core challenge Apple faces is that buying things with a credit card isn’t nearly as onerous a process as they make it out to be.”