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What you need to know about Apple Pay

Ryan Faas | Sept. 10, 2014
Today, Apple introduced its mobile payment system — known simply as Apple Pay.

Today, Apple introduced its mobile payment system — known simply as Apple Pay. On the face of it, Apple Pay doesn't seem all that different than other mobile and contactless payment systems that are based around NFC. It's very easy to see Apple Pay as a let to the party variation of Google Wallet, which never made much of a dent in the U.S. payments industry.

However, Apple has brought some significant things to the mobile payments industry that haven't been present in a fully integrated way. As is its character, Apple waited till it had developed and tested the technologies involved in Apple Pay, gauged user response to pieces of those technologies, and ensured that it had serious commitment from the partners that it needs to make the initiative a success including the top three payment processors — Visa, MasterCard, and American Express — and major institutions offering credit and/or debit cards as well as major retail chains.

The technology

Apple had been rumored to be exploring mobile payments for years. The introduction of Passbook in iOS 6 two years ago was the first real sign that there might be some truth to those rumors. Passbook didn't go as far as allowing users to store their credit cards in their iPhones, but it did allow them to store gift cards, loyalty cards, event tickets, and even airline boarding passes. Each app or pass (standalone passes not associated with an app can be created) can be time and date-enabled or location-enabled so that it appears automatically on the iOS homescreen when a user is at a particular store, venue, or airport. The Passbook user interface actually looks very much like a virtual wallet and the demoed Apple Pay interface.

Touch ID was also presumed from its inception to be aimed at enabling secure mobile payments. The system, introduced last year with Apple's A7 chip and the iPhone 5S, is made up of two hardware components — the fingerprint scanner built into the iPhone home button and the Secure Enclave, a section of the A7 chip that is used for advanced cryptography algorithms and for storing specific data points like data about a user's fingerprints in a highly secure fashion. (Check out my look at Touch ID in iOS 8 from earlier this summer, Apple's iOS security document released in February for more details, or the Touch ID session from Apple developer conference in June.) The Secure Enclave is separate from the rest of the A7 components and has a unique identifier burned into it in the manufacturing process that even Apple doesn't know. The result is a highly secure system.

 

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