How Does Apple Pay Mobile Payment Work?


Apple has launched Apple Pay, a contactless mobile payment technology. Apple Pay will be available with iPhone 6, as well as the Apple Watch, two gadgets the Cupertino giant also unveiled on Tuesday.

Apple Pay uses NFC, as well as a dedicated chip called the Secure Element, and Touch ID for security. Touch ID is a biometric technology from Apple that uses a fingerprint identity sensor for verification purposes. Users can set up and manage their Apple Pay accounts via iTunes. Apple Pay can be used on the App Store for purchases, and integrates with Passbook, a home-grown app from Apple that lets users store things like airline boarding passes, movie tickets, and gift cards.

Eddy Cue (Senior vice president, Internet Software and Services, Apple): 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.

How does Apple Pay work?

When users add 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. Apple Pay integrates with Passbook, and users can add the credit or debit card from their iTunes account to Passbook by entering the card security code. The iSight camera on the iPhone can instantly capture debit/credit card information as well.

With Apple Pay, instead of using the actual credit and debit card numbers when users add your card, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element, a dedicated chip in iPhone and Apple Watch. These numbers are never stored on Apple servers. When a purchase is made, the Device Account Number alongside a transaction-specific dynamic security code is used to process the payment, the actual credit or debit card numbers are never shared with merchants or transmitted with payment. Apple does not store transaction details.

Apple Pay can also be used for online shopping in apps. Checkout can happen with a single touch, and card details are kept private and are not shared with the online merchant.

Where can Apple Pay be used?

In addition to the 258 Apple stores in the US, retailers supporting Apple Pay include Bloomingdale’s, Disney, Macy’s, McDonald’s, Sephora, Staples, Subway, Walgreens and Whole Foods, among others, spread across 220,000 stores in the US that accept contactless payments.

Apple Pay is supported by American Express, MasterCard and Visa. Other financial organizations that will support Apple Pay include American Express, Bank of America, Capital One Bank, Chase, Citi and Wells Fargo, with Barclaycard, Navy Federal Credit Union, PNC Bank, USAA and U.S. Bank, joining the fray soon after.

[Image courtesy: Apple]

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