APPLE PAY: NFC mobile payments arrive on the iPhone

“It’s all about the wallet,” Apple CEO Tim Cook explained during the unveiling of Apple Pay mobile payments and the iPhone 6, iPhone 6 Plus and Apple Watch with NFC on 9 September. “Our vision is to replace this and we’re going to start by focusing on payments.”

“Payments is a huge business,” Cook explained. “Everyday, between credit and debit, we spend $12bn. That’s over four trillion dollars a year and that’s just in the United States. And this business is comprised of over 200,000,000 transactions a day.

“That’s 200,000,000 times that we scramble for our credit cards and go through what is a fairly antiquated payment process. Most people that have worked on this have started by focusing on creating a business model that was centered around their self interest instead of focusing on the user experience. We love this kind of problem. This is exactly what Apple does best. And so, we’ve created an entirely new payment process and we call it Apple Pay.”

Eddy Cue added: “We’ve got a groundbreaking NFC radio antenna built across the top. Now NFC is the standard for all contactless payments. And you also have the convenience and security of Touch ID and we’ve got a new chip called the secure element and it’s built into every iPhone 6 and it stores all of your payment information encrypted and securely.

“You can also see all of your credit cards on Passbook. Now Apple Pay is easy, it’s secure and it’s private. We have hundreds of millions of credit cards and debit cards from customers in their iTunes store accounts.

“When they get a new iPhone 6, they can just say, use the card on file. But it’s also easy to add a new card. Using your iPhone iSight camera, we take a picture of the card, grab all the information, go to your bank and verify that that’s your card and we add it right to Passbook. And now, with just a touch, you’ve paid. It’s that fast, it’s that easy.

Tokenization

“Now we’ve also integrated security throughout both the hardware and software in a way that only Apple can so when you add a new credit card, we don’t store the credit card number, we don’t give it to the merchant.

“We create a device-only account number and we store it safely in the secure element and each time you pay, we use a one-time payment number along with a dynamic security code so you no longer have the static code on the back of your plastic card and if your iPhone is lost or stolen, you can use Find my iPhone and suspend all of the payments from that device and again, because the credit card isn’t stored on the device, there’s no need to cancel your credit card. Now, security is at the core of Apple Pay, but so is privacy.

Business model

“We are not in the business of collecting your data. So, when you go to a physical location and use Apple Pay, Apple doesn’t know what you bought, where you bought it, or how much you paid for it. The transaction is between you, the merchant and your bank. It’s fast, it’s secure and it’s private.

COOK: “Apple Pay will forever change the way all of us buy things”

Availability

“Now, we’re starting in the US with credit cards and debit cards from the three major networks, American Express, MasterCard, and Visa and we’ve got the six biggest issuing banks in the US, along with a few more, they add up to more than 80% of all credit card volume in the US and we’ll keep adding even more banks.

“You can use Apple Pay in the over 220,000 locations that accept contactless payments today but we’ve been working with some of the largest retailers to enable Apple Pay in all of their locations.

“The largest department stores Macy’s and Bloomingdale’s, the largest drug stores Walgreens and Duane Reade with over 8,000 locations and eight million visitors. Staples, the largest office products. Subway, with over 26,000 locations in the US. McDonald’s, with 27 million visitors every day — and McDonald’s is even adding Apple Pay to its drive-thru.

“Whole Foods, the healthiest grocery store and leading provider of organic food. And our own Apple retail stores. And Disney, the happiest place on earth. Disney is adding Apple Pay to all of their Disney stores and Disney World in time for Christmas. And that’s just some of the many retailers that are adding Apple Pay in all of their locations.

Online payments

“But what about online? We want to make online purchasing just as fast, more secure, more private. There’s over a billion dollars a day spent on online purchasing. That’s five million daily transactions just in the US alone and the process is really cumbersome. You’ve got these long forms to fill out for each and every app that you shop in.

“Well, with Apple Pay, one touch checkout. There’s no need to enter your credit card, your expiration date, your security code. You don’t even have to enter your shipping or billing address and none of your credit card information is shared with the merchant. We use the one-time payment number out of the secure element.

“We’ve been working with some great retailers like Target to enable Apple Pay into their shopping app. So, I don’t know about you, but I’m looking for some Beats headphones. And now, with Apple Pay, you can just checkout with a touch and you see the credit card and the shipping address and now, with one touch, I’ve bought it, it’s that simple.

“Now we’re adding Groupon. Groupon is a leader of ecommerce and they’re incorporating Apple Pay right into their app so now you can see a new deal and buy it with just a touch. Uber’s got a new feature called Ride Now, so you can request a car using Apple Pay without the need to create an account at all.

“MLB is adding the ability of buying tickets right in their app with Apple Pay. Our Apple stores where you can buy all of our latest products and OpenTable. Now you use OpenTable to make dinner reservations but in participating restaurants, you’re going to be able to use Apple Pay in the OpenTable app to pay for your cheque, that’s really cool. And that’s just some of the many apps that are incorporating Apple Pay.

API

“Now in iOS 8, we have a new Apple Pay API that’s going to be available to all developers so we can expect a lot more apps. Apple Pay, it comes with every iPhone 6 and 6 Plus. We’re launching in the US starting next month. It will be available as a free update to iOS 8. And we’re working hard to bring Apple Pay to even more countries. And that’s Apple Pay.”

Cook: “Apple Pay will forever change the way all of us buy things and it’s one more reason that iPhone 6 and iPhone 6 Plus are the biggest advancement in the history of iPhone.”

• Apple has also included NFC in its new Apple Watch and wearers will be able to use it to replace physical keys as well as make payments.