Understanding Apple Pay

Posted on Sep 18 2014 - 12:13pm by Eric Tompkins

apple pay machine

Eric Tompkins (@_codemics)

Apple Pay allows users to use their iPhones to pay for goods and services.

“Apple Pay will change how you pay with breakthrough contactless payment technology and unique security features built right into the devices you have with you every day. So you can use your iPhone 6 to pay in an easy, secure, and private way. “

Utilizing a fingerprint scanner to access your secured credit card information, you will simply hold your phone near the “contactless” reader with your finger on the “Touch ID” and your transaction will be completed. You will not need to enter PIN numbers or any other information. Yeah I know, it sounds a little scary doesn’t it?

This same easy pay feature will work with purchasing apps and for in-app purchases. This is just what I needed, an even easier way to purchase yet another rendition of “Angry Birds”.

Setup

“Setup is simple. Passbook already stores your boarding passes, tickets, coupons, and more. Now it can store your credit and debit cards, too. To get started, you can add the credit or debit card from your iTunes account to Passbook by simply entering the card security code.
To add a new card on iPhone, use your iSight camera to instantly capture your card information. Or simply type it in manually. The first card you add automatically becomes your default payment card, but you can go to Passbook anytime to pay with a different card or select a new default in Settings.”

The use of the iSight camera to capture your credit card info is a nice little add-on.

Security

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

Apple Pay stores your account info so there is no need to carry your cards with you, which helps protect you from theft. This of course is only possible as more retailers adopt the new form of payment. Apple says that the pay option is already accepted at 220,000 stores and counting. Many retailers and banks are already on board.

If your phone is lost, you can use the “Find My Phone” to lock your phone or to wipe it remotely.
Your purchases are kept private, Apple claims that they do not store the details of your transactions, so they can’t be tied back to you in anyway. Your most recent purchases are kept in Passbook for your convenience, but no more than that.

What will this do to PayPal and other payment services?

Bombarded with questions about whether Apple’s mobile payments service threatens its business, PayPal has answered with a zinger: “We the people want our money safer than our selfies.”
The e-commerce company trumpeted that message in a full-page ad in Monday’s New York Times, touting itself as the protector of the “People Economy.” Apple plunged into PayPal’s turf last week by introducing Apple Pay, which will allow users to buy items in stores with just a wave of their iPhones, in addition to making purchases in apps. Shares of eBay, PayPal’s parent company, were down as much as 3 percent the day Apple Pay was announced, as concerns mounted that Apple users will abandon PayPal. The news even inspired headlines as stark as: “Will Apple Pay Kill Pay Pal?”

But Apple’s nude celebrity picture gaffe gave PayPal ammunition. Just more than a week before Apple unveiled new products and services at the Flint Center for the Performing Arts in Cupertino, hackers infiltrated the iCloud accounts of celebrities such as Jennifer Lawrence and Kate Upton, leaking their intimate photos to the world. If Apple can’t keep steamy selfies under wraps, it shouldn’t be trusted with precious financial information, PayPal suggested in its ad.

Apple Pay does not intersect with iCloud. Rather, the service uses near-field communication technology to send merchants a special number linked to users’ bank accounts. Users also register their fingerprints with the scanner on their iPhones to seal the deal. It remains to be seen how well Apple Pay’s security features hold up in practice, but the selfie scandal probably won’t spell doom for the offering.

About the Author
Eric Tompkins

Eric Tompkins is an Experienced Web Developer and Digital Media Professional. As well as a Professional Photographer and Technical Instructor. You can follow on Twitter @_codemics.