Apple Pay – the Long Road to Quick Payment

• Apple Pay launching as an exclusive service for iPhone 6 and iWatch

• Touch ID facilitates user friendly payment at the point of sale or with apps

• Card data of customers will not be transferred to merchants

On September 9th, Apple presented the iPhone 6, the Apple Watch and the new payment system Apple Pay. With the introduction of the new payment service, Apple has completed its now five-year journey to setting up a payment functionality that is simultaneously integrated and user-friendly – thereby putting an end to all speculations about its possible participation in the field of payment transactions.

Source: Apple

These speculations have been fueled by the fact that since 2009, Apple has applied for a series of patents related to applying NFC technology and the construction of a payment system. Included among these solutions were EasyPay, presented at the end of 2011, as well as iWallet, patented in 2012. With Passbook, Apple is going back to a component that was already introduced in autumn 2012. The application, which allows users to store boarding passes, tickets and coupons, now also integrates credit and debit card data.

In order to realize Apple Pay, Apple is working together with three major credit card providers, Visa, Master Card and American Express, and cooperating with finance institutes including Bank of America, Citi and Chase. Only cards offered by these participating banks can be integrated into the payment service. Users can draw on the payment information already stored in iTunes and add further account details to the system. In the market, McDonalds, Subway and Toys “R” Us currently support Apple Pay. Deals offered by apps such as Groupon and Uber can be paid for using Apple Pay from the moment it hits the market, and additional cooperations are in the works.

To ensure the convenience of the functionality, Apple has employed a finger sensor, more specifically, one-touch functionality. This means it is not necessary to call up a separate payment or account app, users do not even need to unlock their smartphone in order to use the service. Touching the finger sensor is the only required interaction for the user. The same action can be carried out using the Apple Watch by double clicking the button underneath the crown.

Both devices – the iPhone as well as the Apple Watch – contain a Secure Element. Apple employs NFC technology within the devices in order to transmit data from the smartphone to the reader at the point-of-sale terminal. As soon as a user has activated Apple Pay, the system generates a device-specific identification number. This identification number is transmitted during a transaction along with a token that is dynamically generated for each individual transaction. At no point in the process does the merchant receive the card data of the customer. Apple assures its users that no transaction data are stored on Apple servers, meaning that data are never accessed directly. The only information that can be accessed are the latest transactions, which are stored in Passbook for a limited time.

With Apple Pay, just as with previous products, Apple completely controls the design of the user experience and ties the respective service partners into the new concept.

How wide the influence of Apple Pay will be on the highly competitive payment market remains to be seen over the next few months, but one thing is for sure: Apple has once again set new standards in terms of user friendliness.

http://www.apple.com/apple-pay/
https://developer.apple.com/apple-pay/
http://www.heise.de/mac-and-i/meldung/Apple-Pay-Mobil-bezahlen-mit-dem-iPhone-2382575.html
http://www.theverge.com/2014/9/9/6084211/apple-pay-iphone-6-nfc-mobile-payment