Apple has announced Apple Pay, a new category of service designed to transform mobile payments with an easy, secure and private way to pay. It work with the iPhone 6 and iPhone 6 Plus through a NFC antenna design, a dedicated chip called the Secure Element, and Touch ID.
Eddy Cue, Apple’s senior vice president of Internet Software and Services, says Apple Pay is easy to set up, so hundreds of millions of users can simply add their credit or debit card on file from their iTunes Store account. Apple Pay will also work with the newly announced Apple Watch, extending Apple Pay to over 200 million owners of iPhone 5, iPhone 5c and iPhone 5s worldwide.
Apple Pay supports credit and debit cards from the three major payment networks, American Express, MasterCard and Visa, issued by the most popular banks including Bank of America, Capital One Bank, Chase, Citi and Wells Fargo, representing 83% of credit card purchase volume in the US. In addition to the 258 Apple retail stores in the US, some of the nation’s leading retailers that will support Apple Pay include Bloomingdale’s, Disney Store and Walt Disney World Resort, Duane Reade, Macy’s, McDonald’s, Sephora, Staples, Subway, Walgreens and Whole Foods Market.
The Apple Watch will also work at the over 220,000 merchant locations across the US that have contactless payment enabled. Apple Pay is also able to make purchases through apps in the App Store.
“Security and privacy is at the core of Apple Pay. When you’re using Apple Pay in a store, restaurant or other merchant, cashiers will no longer see your name, credit card number or security code, helping to reduce the potential for fraud,” says Cue. “Apple doesn’t collect your purchase history, so we don’t know what you bought, where you bought it or how much you paid for it. And if your iPhone is lost or stolen, you can use Find My iPhone to quickly suspend payments from that device.”
When you add a credit or debit card with Apple Pay, the actual card numbers aren’t stored on the device nor on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on your iPhone or Apple Watch. Each transaction is authorized with a one-time unique number using your Device Account Number. Instead of using the security code from the back of your card, Apple Pay creates a dynamic security code to securely validate each transaction, says Cue.
Starting in October, with iPhone 6 and iPhone 6 Plus, Apple Pay will be available in the US as a free update to iOS 8. It will work in stores with iPhone 6, iPhone 6 Plus and Apple Watch. Apple Pay APIs [application programming interfaces] will be available to developers in iOS 8 so they can enable purchasing physical goods within their apps on iPhone 6 and iPhone 6 Plus.