Apple Pay

Apple Pay

Apple Pay on an iPhone and an Apple Watch
Developer(s) Apple Inc.
Initial release October 20, 2014 (2014-10-20)
Operating system iOS 8.1 or later
watchOS
Platform • physical & in-app
Apple Watch, iPhone 6 / 6 Plus, iPhone 6S / 6S Plus, iPhone SE
• via Apple Watch only
iPhone 5, iPhone 5C, iPhone 5S
• in-app only
iPad Air 2, iPad Pro, iPad Mini 3, iPad Mini 4
License Proprietary
Website www.apple.com/apple-pay (US)
www.apple.com/uk/apple-pay (UK)
www.apple.com/ca/apple-pay (CA)
www.apple.com/au/apple-pay (AU)
www.apple.com/cn/apple-pay (CN)
www.apple.com/sg/apple-pay (SG)

Apple Pay is a mobile payment and digital wallet service by Apple Inc. that lets users make payments using the iPhone 6, 6 Plus, and later, Apple Watch-compatible devices (iPhone 5 and later models), iPad Air 2, iPad Pro and iPad Mini 3 and later. Apple Pay does not require Apple Pay-specific contactless payment terminals, and can work with existing contactless terminals.[1]

Service

Apple Pay lets mobile devices make payments at contactless points of sale and in iOS apps. It digitizes and replaces the credit or debit card chip and PIN or magnetic stripe transaction at point-of-sale terminals. It is similar to contactless payments already used in many countries, with the addition of two-factor authentication. The service lets Apple devices wirelessly communicate with point of sale systems using a near field communication (NFC) antenna, a "dedicated chip that stores encrypted payment information" (known as the Secure Enclave), and Apple's Touch ID and Wallet.[2] The service is compatible with the iPhone 6, 6 Plus, 6S and 6S Plus, iPhone SE, iPad Air 2 and the Apple Watch. Users with iPhone 5, 5C, 5S, 6, 6 Plus, 6S, 6S Plus, and iPhone SE can use the service through an Apple Watch, though it lacks Touch ID security.[2] Instead, Apple Pay is activated with a passcode and will remain active for as long as the user wears the Apple Watch.[3]

The service keeps customer payment information private from the retailer, and creates a "dynamic security code [...] generated for each transaction".[2] Apple added that they would not track usage, which would stay between the customers, the vendors, and the banks. Users can also remotely halt the service on a lost phone via the Find My iPhone service.[2]

To pay at points of sale, users hold their authenticated Apple device to the point of sale system. iPhone users authenticate by holding their fingerprint to the phone's Touch ID sensor,[2] whereas Apple Watch users authenticate by double clicking a button on the device.[4] To pay in supported iOS apps, users choose Apple Pay as their payment method and authenticate with Touch ID.[2] Users can add payment cards to the service in any of three ways: through their iTunes accounts, by taking a photo of the card, or by entering the card information manually.

In the United Kingdom, payments using contactless cards are limited to £30 (previously £20 until August 2015) as they have only one-factor authentication. Although payments using Apple Pay have two-factor authentication and no transaction limit, they are in practice subject to the previous £20-30 transaction limit until retailers upgrade the software in their terminals to support the latest network contactless specifications.[5][6]

Apple assumes some liability for fraudulent use of the service.[2] Banks are expected to carry the burden of the service, and Apple is said to have negotiated smaller transaction fees. In turn, the banks hoped to capture purchases that were formerly handled without credit.[7] Financial Times reported that Apple receives 0.15% cut of US purchases made with the service,[8] but, following the UK launch, reported that Apple's cut is much lower in the UK. This is largely because Regulation (EU) 2015/751 capped interchange fees in the European Economic Area at 0.3% for personal credit cards and 0.2% for personal debit cards with effect from June 8, 2015.[9][10]

History

The service was announced at Apple's iPhone 6 event on September 9, 2014. At its announcement, Apple CEO Tim Cook described the magnetic stripe card payment process as broken for its reliance on plastic cards "outdated and vulnerable magnetic interface", "exposed numbers", and insecure "security codes".[2] The iOS 8.1 software update accompanying the service's launch activated Apple Pay on compatible devices.[2][4][11] The company announced an API for app developers to build Apple Pay checkout into their apps.[2]

The service was in preparation for "a long time", as Apple acquired startups, hired executives and filed patents related to payments.[2] Apple partnered with American Express, Mastercard and Visa. Their joint project began in January 2013, though they had discussed Apple's potential involvement for years. Their joint solution was a system where single-use digital tokens would replace the transfer of personal information.[7] A Visa executive said that 750 people at the company worked on the anonymized "token" system for a year, and the other partners had similar teams in collaboration.[12] MasterCard began work on the project in 2013 and hoped that their joint work would become a "standard for mobile payments".[12] The announcement of the service came at a time when MasterCard and Visa policy created strong incentives for upgrading to mobile payment-compatible point of sale systems.[2] Apple then approached several big banks in mid 2013 and did not divulge the names of the other banks. To maintain secrecy, JPMorgan set up a windowless "war room" where the majority of the sensitive work was done. Of their 300 people on the project, about 100 knew that the partner was Apple. Others close to the project did not know it was named "Apple Pay" until the announcement. The company's participation remained a secret leading up to its announcement.[7]

The service initially supported US-issued payments cards. An international roll-out is ongoing, beginning with support for UK-issued payment cards in July 2015.[13] On December 17, 2015, Apple announced that it will launch Apple Pay with 15 major banks in China,[14] and Chinese users can use Apple Pay since February 18, 2016.[15] Apple Pay launched in Singapore on April 19, 2016 with American Express issued cards. In the coming months, Apple Pay will support Visa, MasterCard and American Express cards issued by Singapore's main banks, including DBS, UOB, and Standard Chartered.[16] On April 27, 2016, ANZ made Apple Pay available to their American Express and Visa cardholders in Australia.[17][18]

On May 4, 2016, Kohl's became the first retailer allow the use of Apple Pay with Kohl's Charge Cards or other credit or debit cards enrolled with Apple Pay and simultaneously earn Yes2You Rewards loyalty points with a single tap using Apple Pay. J. C. Penny announced that they will be rolling out the same in the near future.[19]

Under a partnership with American Express, Hong Kong and Spain will also get Apple Pay support in 2016.

Release dates
Date Support for payment cards issued in
October 20, 2014 United States United States
July 14, 2015 United Kingdom United Kingdom[20]
November 17, 2015 Canada Canada[21] (American Express)[22]
November 19, 2015 Australia Australia[23] (American Express)[22]
April 27, 2016 Australia Australia (ANZ)[17][18]
February 18, 2016 China China (UnionPay)[14]
April 19, 2016 Singapore Singapore (American Express)[24]
2016 Hong Kong Hong Kong (American Express)[24]
2016 Spain Spain (American Express)[24]

Reception

Reviews

Journalists noted the multiple previously unsuccessful efforts of other retailers to build mobile payments services,[2][12] including those of PayPal, Wal-Mart, Target,[2] Google Wallet, and Softcard.[12] They noted that previous efforts did not solve customer inconvenience issues, and felt that Apple Pay potentially did.[2] The Verge's Adrianne Jeffries noted that mobile payment market fragmentation was partially due to Apple's refusal to enter the market. BusinessWeek's Joshua Brustein added that Apple has a history of letting "first movers fail" with an early version of the service before releasing "a more polished version of the same idea".[2] The Verge's Dieter Bohn called Apple Pay the "week's most revolutionary product" and the announcement "a classic Apple moment of simplification and integration", and the partnership between payments services and Apple "a rare piece of collaboration and agreement". He predicted that the service's effect on the mobile payments industry would be similar to the iPhone's effect on the smartphone industry.[12] Nathaniel Popper of The New York Times referred to the banks' level of coordination with Apple as "elaborate" and indicative of mutual "preparation and investment".[7] Some analysts added that the service could reduce the standard credit card transaction fees over time, since fees traditionally cover credit card fraud. The banks were willing to work with Apple in the face of efforts like Bitcoin and the Merchant Customer Exchange, which seeks to work around the card networks.[7]

Early reviews of the service regarded it as easy to use, but were not sure whether the service would become widely adopted.[25][26] The Verge's Nilay Patel wrote that the product demo was "remarkably smooth" and "a cohesive user experience".[25] Patel said the process took five to ten seconds at a retail card reader, and added that it may be less smooth at stores such as Walgreens, where cashiers prompt customers for loyalty cards and charity donations.[25] The New York Times's Neil Irwin wrote that Apple exaggerated the inconvenience of credit cards. Among the plastic card's benefits, he included how others could make purchases on another's behalf and how dead cell phones could leave the owner stranded.[26]

There are many controversial topics as to whether or not Apple Pay is safe.[27] The answer may vary from different perspectives. However, Apple has taken major steps to make it very secure. Besides the NFC-based chip architecture, Apple has integrated Touch ID and a complex passcode architecture into the mobile wallet system. Apple Pay also keeps your identity a secret throughout the process. Each Apple Pay transaction online or in-app is authorised with a one-time unique dynamic security code, instead of using the safety code from the back of your card.

Adoption

Paying for coffee with Square's Apple Pay reader

Apple announced that more than 1 million credit cards had been registered on Apple Pay in the first 3 days of its availability,[28] making it the largest mobile payment system in the US at the time.[29] There were 220,000 participating vendors when it launched.[30][31] Outside the United States and the United Kingdom, Apple Pay can be used with American and British payment cards at compatible NFC-based payment terminals.[32][33][34]

In the United States, Apple faced opposition by the mobile payments industry, particularly the Merchant Customer Exchange (MCX) which is trialling a competing system known as CurrentC. Several participants of CurrentC, such as Best Buy and Walmart, have initially stated that they would not accept Apple Pay as a result of exclusivity deals. CVS Pharmacy and Rite-Aid subsequently disabled all NFC payment systems in favor of CurrentC,[7][35][36] although the latter is due to accept Apple Pay with the exclusivity period ending in August 2015.[37] Best Buy has begun to accept Apple Pay at all stores starting in October 2015.[38] Target's CEO Brian Cornell said that they would be open to accepting Apple Pay eventually after chip and pin is done, but they remain involved with MCX.[39]

Transport for London, one of Apple Pay's official UK launch partners and one of the largest contactless merchants in the world, became the UK's most used Apple Pay merchant.[40][41][42][43]

As of February 11, 2016, 20% of iPhone 6 users in the United States reported using the service at least once.[44] Apple maintains an up-to-date list of merchants who accept Apple Pay on its website.

See also

References

  1. ↑ Turner, Adam (September 10, 2014). "Apple Pay gives tap-and-go a much-needed shove". The Sydney Morning Herald. Retrieved September 11, 2014.
  2. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Jeffries, Adrianne (September 9, 2014). "Apple Pay allows you to pay at the counter with your iPhone 6". The Verge. Vox Media. Archived from the original on September 13, 2014. Retrieved September 13, 2014.
  3. ↑ "Clever trick will safeguard Apple Watch from thieves". Cult Of Mac. September 10, 2014. Retrieved November 10, 2014.
  4. 1 2 D'Orazio, Dante (September 9, 2014). "Apple Watch works with Apple Pay to replace your credit cards". The Verge. Vox Media. Archived from the original on September 13, 2014. Retrieved September 13, 2014.
  5. ↑ "About Apple Pay for merchants in the UK". Apple. Retrieved July 12, 2015.
  6. ↑ Titcomb, James (June 24, 2015). "Most Apple Pay UK transactions will be limited to £20, for now". The Telegraph. Retrieved July 13, 2015.
  7. 1 2 3 4 5 6 Popper, Nathaniel (September 11, 2014). "Banks Did It Apple's Way in Payments by Mobile". The New York Times. Archived from the original on September 15, 2014.
  8. ↑ Fiveash, Kelly (September 13, 2014). "Apple Pay is a tidy payday for Apple with 0.15% cut, sources say". The Register. Archived from the original on September 13, 2014. Retrieved September 13, 2014.
  9. ↑ Arnold, Martin (July 14, 2015). "UK banks put squeeze on Apple Pay fees". Financial Times. Retrieved July 15, 2015.
  10. ↑ "Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions". European Commission. Retrieved July 25, 2015.
  11. ↑ "How To Set Up Apple Pay On Your Iphone, Ipad and Apple Watch". TaletnLeopard.
  12. 1 2 3 4 5 Bohn, Dieter (September 10, 2014). "Apple Pay was this week's most revolutionary product". The Verge. Vox Media. Archived from the original on September 13, 2014. Retrieved September 13, 2014.
  13. ↑ "Most Apple Pay payments will have £20 limit, banks say". BBC. June 9, 2015. Retrieved July 26, 2015.
  14. 1 2 Rao, Leena (December 17, 2015). "Apple Pay Is Finally Coming To China". Fortune.
  15. ↑ "Apple Pay to be available in China from this week". BBC News. February 18, 2016.
  16. ↑ "Apple Pay rolls out in Singapore". The Straits Times.
  17. 1 2 "Apple Pay - Apple (AU)". Apple (AU). Retrieved 2016-04-27.
  18. 1 2 "Apple, ANZ Bank strike deal to bring Apple Pay to Australia". Reuters. 2016-04-27. Retrieved 2016-04-27.
  19. ↑ Rossignol, Joe. "Kohl’s Becomes First Retailer to Support Store Payments and Rewards With One Tap in Apple Pay". Retrieved 2016-05-05.
  20. ↑ Gurman, Mark (July 4, 2015). "Apple Pay expected to go live in the U.K. on July 14th, £20+ transactions starting this fall". 9to5Mac. Retrieved July 12, 2015.
  21. ↑ http://www.iphoneincanada.ca/news/amex-apple-pay-launch-nov-17/. Missing or empty |title= (help); External link in |website= (help);
  22. 1 2 https://support.apple.com/en-sg/HT204916
  23. ↑ http://www.macrumors.com/2015/11/18/apple-pay-launches-australia-american-express/. Missing or empty |title= (help); External link in |website= (help);
  24. 1 2 3 http://www.todayonline.com/tech/apple-pay-seeks-growth-asia-europe-after-slow-us-adoption?singlepage=true
  25. 1 2 3 Patel, Nilay (September 9, 2014). "Apple Pay hands-on: is this the future of payments?". The Verge. Vox Media. Archived from the original on September 13, 2014. Retrieved September 13, 2014.
  26. 1 2 Irwin, Neil (September 10, 2014). "Apple Pay Tries to Solve a Problem That Really Isn’t a Problem". The New York Times. Archived from the original on September 14, 2014. Retrieved September 14, 2014.
  27. ↑ Brown, Aaron. "Is Apple Pay SAFE: How paying in-store with your iPhone REALLY works". Express.co.uk. Retrieved 2016-03-14.
  28. ↑ Worland, Justin (October 28, 2014). "Apple Pay Registers 1 Million Credit Cards in 3 Days". Time. Retrieved October 29, 2014.
  29. ↑ "Number Of Users On Apple Pay - Business Insider". Business Insider. Retrieved October 29, 2014.
  30. ↑ Perez, Sarah (September 9, 2014). "Apple Announces Mobile Payment Solution Called Apple Pay". TechCrunch. AOL. Archived from the original on September 22, 2014. Retrieved September 22, 2014.
  31. ↑ Snider, Mike (September 9, 2014). "Apple hopes to jump-start mobile payments with Apple Pay". USA Today. Archived from the original on September 22, 2014. Retrieved September 22, 2014.
  32. ↑ Smith, Chris (October 21, 2014). "Apple Pay works in countries outside the U.S. with this simple trick". Boy Genius Report. Retrieved July 26, 2015.
  33. ↑ Gokey, Malarie (October 22, 2014). "Apple Pay Works Abroad! ... If You Have a U.S. Credit Card". Digital Trends. Retrieved July 26, 2015.
  34. ↑ Rogowksi, Mark (October 20, 2014). "Apple Pay Is Here And It's Going To Be Great: Why The Skeptics Have It Wrong". Forbes. Retrieved October 21, 2014. First, a clarification. There is no 'accepting Apple Pay.' You may have read an article or five suggesting that retailers don’t plan to support Apple Pay, implying there is some special thing they have to do to work with Apple. What a retailer needs is nothing more than a NFC-equipped point-of-sale terminal.
  35. ↑ Constine, Josh (October 25, 2014). "CurrentC Is The Big Retailers’ Clunky Attempt To Kill Apple Pay And Credit Card Fees". TechCrunch. AOL Inc. Retrieved October 26, 2014.
  36. ↑ "Apple Pay goes offline at CVS, Rite Aid". Ars Technica. October 30, 2014. Retrieved October 30, 2014.
  37. ↑ Rite Aid Reverses Course, Will Accept Apple Pay Starting August 15
  38. ↑ http://www.macrumors.com/2015/09/17/best-buy-apple-pay-rolling-out/
  39. ↑ http://recode.net/2015/05/27/target-ceo-loves-apple-pay-but-wants-chip-and-pin-cards-first/
  40. ↑ Mortimer, Natalie (July 20, 2015). "TfL proves most popular retailer on Apple Pay UK following launch". The Drum. Retrieved July 22, 2015.
  41. ↑ Titcomb, James (July 20, 2015). "How London's transport crunch forged a contactless revolution". The Telegraph. Retrieved July 22, 2015.
  42. ↑ Gibbs, Samuel (July 16, 2015). "TfL cautions users over pitfalls of Apple Pay". The Guardian. Retrieved July 22, 2015.
  43. ↑ "Apple Pay". Transport for London. Retrieved July 22, 2015.
  44. ↑ "Apple Pay Awareness, Adoption Plateau According to First Annapolis Survey". Annapolis. Retrieved 26 February 2016.

External links

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