Apple announces NFC mobile payments


Available only in the US, Apple Pay brings long awaited NFC payment to iPhone

Apple today announced Apple Pay, a new mobile payments service with an easy, secure and private way to pay. Apple Pay will work with iPhone 6 and iPhone 6 Plus through an NFC antenna design, a dedicated NFC Secure Element chip, and the security and convenience of Touch ID.

However, while Apple Pay is set to launch in the US in October this year, it is not yet known when it will be made available in the rest of the world.

Windsor Holden, a Juniper Research analyst, commented today that Apple Pay is set to give NFC the boost it has been waiting for. He said: “Juniper has argued that the impact of an Apple digital wallet, regardless of interface technology, would create a ‘halo effect’ towards contactless payment in general. We still believe that in most markets this will primarily be driven by contactless card transactions, but that the greater awareness of handset contactless payments that Apple will generate will, in turn, result in an uplift in adoption and usage.”

Apple Pay is easy to set up, so 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 APIs 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.

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.

Holden added: “Now that Apple are going into contactless via NFC…then this will boost the confidence of those banks which have been hesitating around host card emulation (HCE) based deployments. Expect to see a lot more activity around HCE in the near future. In short, Apple just gave NFC the greatest shot in the arm that it has ever received.”

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. 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.

In terms of security, when a user adds a credit or debit card with Apple Pay, the actual card numbers are not 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 the iPhone or Apple Watch. Each transaction is authorised with a one-time unique number using the Device Account Number and instead of using the security code from the back of the card, Apple Pay creates a dynamic security code to securely validate each transaction.

Commented Eddy Cue, Apple’s senior vice president of internet software and services: “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. 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.”

Online shopping in apps with iPhone is also as simple as the touch of a finger. Users can pay for physical goods and services including apparel, electronics, health and beauty products, tickets and more with Touch ID. Checkout can happen with a single touch, so there is no need to manually fill out lengthy account forms or repeatedly type in shipping and billing information, and card details are kept private and are not shared with the online merchant. For example, quickly order grill accessories for a backyard BBQ from the Target app, easily request a ride with Uber without having to create an account first or avoid the lunch line by using Rapid Pick-Up and paying ahead in the Panera Bread app.

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. Apple Pay will work in stores with iPhone 6, iPhone 6 Plus and Apple Watch.


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