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Apple Pay hits U.S. stores Monday -- assuming buyers can find anywhere to use it

Matt Hamblen | Oct. 20, 2014
In-store and online purchases possible with new iPhones powered by Touch ID, NFC and secure token technology.

Apple Pay launches on Monday in the U.S., giving buyers new technology to make in-store and online payments possible with NFC-ready iPhone 6 and iPhone 6 Plus smartphones by simply using Touch ID.

Apple Pay's online payment capability from within apps will be expanded to the new iPad Air 2 and iPad mini 3 when both become available next week. The in-store payment capability will also work with the Apple Watch when it ships next year.

Apple announced the mobile payment launch in a streamed online presentation Thursday, listing 35 retail brands where a user can make in-store payments by year's end. Stores including Whole Foods, Macy's, McDonald's, Duane Reed, Texaco and others. Apple Pay is reachable from within the Passport app in Apple devices and is enabled by iOS 8.1, a free software update to iOS 8 that will be released Monday.

In addition to those stores, Apple listed 23 store brands accepting online payments with Apple Pay, including Staples and even Starbucks, which today relies upon QR reader technology, not NFC, for in-store payments to buy coffee.

In one of the curious twists with Apple Pay, Starbucks customers will be able to load money from a credit card already stored in an iPhone 6 or iPhone 6 Plus onto a Starbucks card stored in the phone and then use the Starbucks card to buy coffee at a Starbucks terminal equipped with a QR scanner.

"We believe Apple Pay is going to be huge," Apple CEO Tim Cook said in his presentation, ignoring the difficulties faced by previous mobile wallet schemes, including Google Wallet and Softcard, formerly known as Isis. "It's going to change the way we pay for things. The journey begins [Monday] and we can't wait."

Apple Pay uses Near Field Communication chips inside the phones that are read by NFC readers available in an estimated 220,000 stores nationwide; a user just passes the phone close to a terminal while holding the Touch ID. "A subtle vibration and beep let you know" when a purchase is done, Apple advises in an online explainer accompanied by a video snippet.

Apple Pay also relies on new token technology that is backed by MasterCard and Visa to secure either in-store or online transactions along with the Touch ID: both features work together for better security and were hailed by analysts as unique and groundbreaking.

Apple supports the credit and debit cards from the three major card companies — American Express, Visa and MasterCard. In addition, more than 500 banks are backing Apple Pay, though Apple named just a few: Chase, Capital One, Bank of America, Citi, Wells Fargo, US Bank, Barclaycard, PNC, USAA, Navy Federal Credit Union and American Express. Those banks represent 83% of all credit card purchasing in the U.S.


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