Apple wants to replace the old leather wallet with its digital version. But whether the trendsetting company can kickstart the mobile payments landscape to the next level remains to be seen.
The company revealed its NFC-based Apple Pay network during a much-hyped event Tuesday, which also included the reveals of the new iPhone and the much-anticipated iWatch wearable device.
Apple Pay is built into the iPhone 6 and iPhone 6 Plus and will be available in the US in October. Users can add a credit card from their iTunes account or add a new card by snapping a picture of it with the device's camera. Once the card information is uploaded to Apple Pay, consumers can hold their iPhone in front of a reader that Apple says will be in more than 200,000 retail locations, including Whole Foods, Subway, McDonald's, and Macy's. The purchase will be confirmed with its Touch ID fingerprint scanner.
The new service will utilize tokenization technology to prevent fraud; a one-time code will be generated for each transaction. During the presentation, CEO Tim Cook said card data will not be stored on the phone, and a merchant cashier would not see a user's name or card number.
Sam Maule, senior analyst with Carlisle & Gallagher Consulting Group, said this could be welcome news for retailers, which have been hit with numerous high-profile breaches over the past year. He also called the Apple Pay announcement good news for banks and the traditional payment networks. Apple is working with American Express, MasterCard, Visa, and many banks. In fact, it boasted that Apple Pay has agreements with bank issuers that handle 83% of US credit card purchase volume.
"They're playing within the traditional rails," Maule said. "I think there's a lot of wins for banks with this announcement."Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio