Apple Pay is Apple’s contactless payment technology. With it users will be able to simply place their iPhone up to a contactless card terminal and press their finger to their iPhone’s Touch ID to pay for their purchase.
When Tim Cook introduced the new service he stated that most people use credit cards, but added: "[they're now a] fairly antiquated payment process” that is almost 50 years old. Speaking about a credit card’s drawbacks Cook said, “We're totally reliant on the exposed numbers and the security codes that all of us know aren't secure. It's no wonder that people have dreamed of replacing these for years. But they've all failed.”
But really. It's all about the Benjamins...
With over 200 million credit card transitions a day in the US alone, Cook said the payment transaction area was ripe for Apple’s innovation. Innovation is one thing, but the advent of Apple Pay stands to net the company billions of dollars in revenue too. According to a recent report from Bloomberg, Apple will receive a fee for every Apple Pay transaction, which means the company will get a share of the more than $40 billion banks generate each year from credit card transactions.
And that is A LOT of cash.
How To Setup Apple Pay
Set up Apple Pay on your iPhone or iPad
Use the steps below:
On your iPhone 6 or iPhone 6 Plus, open Passbook and follow the steps below.
On your iPad Air 2 or iPad mini 3, go to Settings > Passbook & Apple Pay and follow the steps below.
Once inside Passbook, press the + symbol to add a card.
If you have a supported credit or debit card on file with iTunes, enter the card’s security code. Otherwise, use the camera to capture the information on your credit and debit card. Then fill in any additional information needed, including the card security code.
Tap Next. Your bank will verify your information and decide if you can add your card to Apple Pay. If they need more information, they'll ask you to provide additional verification. You can verify your card any time after you add it to Passbook. Just return to Passbook and follow the steps.
What Devices Does Apple Pay Work With?
Not a lot. Apple Pay will only work with the new iPhone 6, iPhone 6 Plus, and the brand new Apple Watch. That’s because Apple Pay requires NFC to communicate with contactless payment terminals. Previous iPhones do not feature NFC, so there’s no way for those devices to support the feature.
It’s possible the next generation iPad, which Apple didn’t mention but is rumored to include Touch ID and come out in October, will support Apple Pay. But that’s just pure conjecture right now.
How Does Apple Pay Work?
When you want to pay for a product, simply take your iPhone 6 out and bring it up to the NFC reader at the till. There’s no app to launch--your iPhone will know you’re making a payment. The screen will show you the total amount and the card you are using. To confirm the payment, simply tap your finger to the Touch ID. Within seconds the transaction is complete. What’s crazy is you don’t even need to look at the screen to know your payment went through. The iPhone 6 produces a subtle vibration alerting you it has.
What Payment Choices Do I Have Using Apple Pay?
With Apple Pay you can simply use the credit card you have on file with your iTunes account or you can use the Passbook app to take a photo of any Visa, Mastercard or American Express card you own. Passbook will pull out all your card details and confirm them with your bank. The card--it can be a debit or a credit card--is then added as a payment method.
Is It Secure?
It seems to be. Once you’ve added all your payment cards their numbers are actually no longer stored in your iPhone. Instead a unique Device Account Number is assigned to each payment method and encrypted and securely stored in a new coprocessor called the Secure Element. The rest of the apps on your iPhone have no access to this Secure Element chip, so your payment details are always safe. Further, even if someone accessed your phone, they couldn’t approve a transaction without your fingerprint.
What’s more is when you make a payment using Apple Pay, the Device Account Number of your payment method is combined with a “transaction-specific dynamic security code”, which means the merchant never even gets access to your credit card number--or even your name. As for Apple, the company says it has absolutely no access to your payment information (with the exception of the card associated with your iTunes account) because all your payment information stays locked in the Secure Element chip and are never sent to Apple’s servers.
And if you lose your phone? Simply wipe it clean with Find My iPhone and all your payment information is deleted from that phone forever.
Where Can Apple Pay Be Used?
In both stores and apps. Apple Pay will work in over 220,000 stores accepting contactless payments including Macy's, Starbucks, McDonalds, Apple Stores, Nike, Disney Stores, PetCo, Whole Foods, and more. Apple Pay will also be capable of making transactions in apps, which should make paying for services in third-party apps much more secure. Supported apps will soon include Uber, Target, Tickets.com, Panera, OpenTable, and Groupon, among others.