Mobile Payments: Apple Pay

1. Introduction

Apple Pay is a mobile payment solution which was launched by Apple in October 2014. It has been designed to allow users to make payments in person, in iOS apps, and on the web, all on the unique Apple device that they have. Apple Pay is available for various Apple devices such as the iPhone and the Apple Watch, which is used to make payments in person. You can also use Apple Pay on your iPad to pay in apps and on the web, and it has been designed to enable safe and secure payments. One of the key objectives of the development was to create a simple, secure, and private way to pay for physical goods and services using a device, without needing to physically get a card out and present it to a card reader. It also expands the range of payment options available in digital channels. For example, it’s possible to pay for a ride on Uber without needing to set up a special account and payment method on this app. Such digital SAAS (Software as a Service) apps are increasingly being used as a way to deliver services, and so Apple Pay helps make payments in these kinds of apps simple and secure. It will be seen that this is a real, contemporary example of how technology is impacting the business process. For example, with the use of smartphones and faster connectivity, it is now possible to pay for something like a bus fare without needing to buy a physical ticket from a station, just by scanning a phone on the reader. This has the potential to change the way that services in a local area or an industry are marketed and sold to customers.

1.1. What is Apple Pay?

Apple Pay digital wallets have been around for quite some time now, and if you are not familiar with the term, you might be wondering “what is the point of Apple Pay, and how does it work?” Well, to put it in a nutshell, Apple Pay is a contactless payment method designed to make the use of your iPhone, iPad, Apple Watch, and Mac as a mode of payment easy. This is achieved through the use of the digital wallet. A digital wallet in itself is what is known as a virtual wallet, which allows you to store details of your credit and debit cards in a secure, encrypted medium such as your smartphone, tablet, or smartwatch. When it comes to Apple Pay, not only does this mean that you do not have to carry physical cards anymore, but it also means that when you use it to make a payment both online and in-store, your full card details are never actually shared with the merchant. This adds an extra tier of security to your transactions and gives you peace of mind that your sensitive payment information will not fall into the wrong hands. But that is not all Apple Pay has to offer. It also includes a feature called “Touch ID” where your identity is confirmed by your fingerprint. This is required when using Apple Pay in-store, as well as using your iPhone or iPad to complete transactions online. This is another layer of security designed to keep your transactions and sensitive payment details safe. And let us not forget “Face ID,” which takes this even further. Available on iPhone X and later models, you can instead opt to turn on facial recognition as a means of authenticating transactions. Just a glance from you at the phone authenticates and authorizes the transaction, meaning that you never actually have to make physical contact with your smartphone or your own face in order to make a payment!

1.2. Benefits of Apple Pay

It is to provide a magical experience, said Bailey. This is what Apple means when it talks about its mobile payments service, and it is also one of the main benefits of using Apple Pay. Because of the way that Apple Pay has been designed to capitalize on the full potential of both hardware and software in Apple mobile devices, the result is cutting-edge mobile payment technology to give customers what Apple calls an intelligent and secure payment platform that is actually easy and fun to use. The main benefit of using Apple Pay is that it is basically a frictionless and intuitive mobile payment experience compared to traditional payment methods. Because of the way that Apple Pay has been designed with simplicity and convenience in mind, as all of the technical, security and payment processing elements are simply taken care of behind the scenes in the background and out of sight from the customer, Apple Pay is extremely easy to use. Also, with Apple Pay needing the user to be present and touch ID and Apple’s hardware and software protection in place such as a dedicated near-field communications chip in the iPhone 6, iPhone 6 Plus and the Apple Watch (as it does not use the so-called static security system most people are used to with contactless cards), this will actually provide even better security for mobile transactions as well as the switching protocols themselves unlike any other mobile payment system in operation now, concluded Bailey. He also added that this type of payment technology will protect the users against any potential fraud and paying with Apple Pay is even safer than using an ordinary plastic card. Because Apple does not store the users credit card numbers, when a customer makes a payment, the credit card numbers are not transmitted and are securely kept across. This stops criminals intercepting the data in transit and attempting to steal it, he said.

1.3. How Apple Pay Works

When you add a credit or debit card to Apple Pay, the actual card numbers are not stored on the device or on Apple servers. Instead, a unique Device Account Number is assigned, encrypted, and securely stored in the Secure Element on your device. When you make a purchase, the Device Account Number, along with a transaction-specific dynamic security code, is used to process your payment. This ensures that your actual card numbers are never shared with the merchant or transmitted with the payment. The Device Account Number can only be used on the device on which it was set up. If you need to, you are always able to remove your card from Apple Pay. For example, if you receive a new card number or new expiration date, you would still be able to add that card to Apple Pay. This is similar to the way automatic payments work – the only difference is that they use your actual card numbers, not the Device Account Number. However, your safety and security are important, so the default card option (if you have multiple cards in Apple Pay) is always set to the last card used in a transaction. This feature also helps you avoid making a transaction with the wrong card – helpful if you’re like me and have both personal and work cards loaded into Apple Pay!

2. Setting Up Apple Pay

Apple Pay™ is a relatively new product that could ultimately be a big step for the mobile payments industry. If you are an Apple user and want to use this service, you will have to first set your iPhone or Apple Watch up to be used with Apple Pay. This section will focus on the basic steps required to ready your devices for use with Apple Pay. The first step in this process is to ensure that you have a compatible device. Currently, Apple Pay is only set up for use with the iPhone 6 and 6 Plus, as well as the Apple Watch. If you have an older version of the iPhone, you will not be able to use Apple Pay unless you upgrade to a newer model. The newest version of the iPad is also set up for use with Apple Pay, meaning that the capabilities of this service could expand in the near future. However, the iPhone 6 and 6 Plus are the only phones that are set up for Apple Pay at this time. Setting the device up for use with Apple Pay is relatively simple and can be done through the Settings app. The device that you are setting up must have a passcode enabled before you can go through the process of adding a card to Apple Pay. The first step in setting up Apple Pay on your iPhone is to open the Passbook app. Once you are in the app, you will have to tap the “+” symbol to start the process of adding your card to Apple Pay. If you are using an Apple Watch, the process is a little different – you will have to open the Apple Watch app on your iPhone and go to the “My Watch” tab. From there, you will tap on “Wallet & Apple Pay” and then select “Add Credit or Debit Card”. After you complete these steps, your iPhone or Apple Watch will ask you to take a picture of your card. Use the iPhone camera to line up the picture and snap a photo. The device will use the picture to add all of your card information except for the security code, which will have to be entered manually.

2.1. Compatible Devices

Apple Pay works best on newer iPhone models from 6 and up, as well as on iPad and Apple Watch models too. The devices must have the latest versions of their respective software installed. Also, the devices must have certain hardware to be compatible with Apple Pay. The iPhone 6 and 6 Plus and later have integrated near-field communication antennas for the use of “The NFC”. The NFC antenna is used to connect the device with the card reader and authorizes the payment when the payment is being accepted. The iPhone 6, 6 Plus, SE and newer have an optional ‘Touch ID’ security feature. The user can register its fingerprint so that it is able to authorize a payment using only the fingerprint. There is no need to type in a password or a pin code. This allows for fast and secure payments. However, this feature is not mandatory to be able to use Apple Pay. The iPhone 6, 6 Plus and SE and newer have the optional ‘Wallet App’. The app enables the user to save virtual versions of their credit cards in it. Also, he or she can search for offers and retail cards that are available for use with Apple Pay. The app automatically integrates with Apple Pay and makes it easy for the user to access it and to manage his or her preferred payment methods. Every step and device requirement is clearly described by Apple on its support page for setting up Apple Pay. It specifies which models are compatible with the service as well as if Apple Pay is available in a certain country. Also, it guides the user through the initial steps to set up the device.

2.2. Adding Cards to Apple Pay

Before a user can begin making contactless payments with Apple Pay, he or she must add a credit or debit card to the app. To do this on an iPhone, a user should open the Wallet app and click the blue “+” sign. Then one should use his or her iPhone’s camera to capture the card’s information. This removes much of the manual entry that is needed when setting up some other mobile payment systems, such as Android Pay. When adding a card on an iPad, the user should go to “Settings,” open “Wallet & Apple Pay,” and select “Add Credit or Debit Card.” As is the case with the iPhone setup, taking a picture of the card populates the card details on the iPad, minimizing the need for manual input. Once a card has been added to Apple Pay, the card’s details still need to be verified by the card’s issuing bank. This helps ensure the security of the payment method. Generally, verifying a card is proceeded by either a text message or a phone call from the bank. After the user responds to this verification, the card is then able to be used with Apple Pay. Also, it is important to note that there is no limit on how many cards a user can add to Apple Pay. This means a user can add all of his or her credit and debit cards to the app without concern for exceeding some sort of imposed limit.

2.3. Verifying Cards for Apple Pay

When you add a card to Apple Pay, a process commonly referred to as “card provisioning”, in most cases it will be provisioned without the need for any further action. However, some providers may require the user to undertake additional verification steps. This might be due to network level restrictions or fraud detection checks. If verification is required, the Wallet app will normally display a message similar to “Card Issuer Needs More Information. To verify your card with […], check an email from Apple”. Following the on-screen instructions from the Wallet App, you will need to open the email account linked with the email address associated with your Apple ID. You will typically find an email from Apple titled “Verify your Apple Pay card for […]”. This email will contain a URL that starts with “https://verify”. Tapping the URL from the email will open the default web browser on your device and take you to a page with Apple branding that acknowledges that you are being redirected to the issuer’s app. This URL redirection is part of a system called Consumer Device Cardholder Verification Method, abbreviated as “CDCVM”. This set of standards allows payment networks – such as VISA, Mastercard, and American Express – to specify that mobile devices may be used to collect and verify cardholder information in a way that constitutes a valid method of authentication for the purpose of a transaction. The verification web page guided by CDCVM will ask you to authenticate the process. This is normally done by providing at least two pieces of authenticating information, such as what you know (a password) and what you have (a one-time security code sent by SMS to the mobile number on file with the card). The exact process will vary between the different card providers, so it is important to carefully follow the on-screen instructions provided in the email and in the web browser. Most card providers will ask you to authenticate by logging into your online portal and completing a two-factor verification – however, certain providers may use alternative methods such as sending a verification code to the phone number on file with the card.

3. Using Apple Pay

To use Apple Pay for purchases in a store, you need to: 1. On the iPhone, you can access your digital Wallet either by selecting the Wallet app or by double-clicking the home button while your phone is locked. On the Apple Watch, you can access your Wallet by double-clicking the side button. Then, hold your iPhone near the contactless reader and leave your finger on Touch ID or use your passcode. Note that with newer iPhone models, you can also authenticate the payment using Face ID instead of Touch ID. With the Apple Watch, you can hold the display up to the contactless reader. When your payment is successful, the screen of your device will confirm the transaction. Keep in mind that if for some reason you can’t establish a connection between the shop’s contactless reader and your device, you may be able to make the payment using the traditional method for your card, as long as this feature is available in the store. Another thing to remember is that you might be asked by the employee at the shop to show a proof of your purchase, for example, the digital receipt. This will appear in the relevant store’s app in the barcode section. 2. You can activate your phone at the checkout screen as needed. This could involve using Touch ID or double-clicking the side button for Face ID. Remember that when you make a payment, a Device Account Number along with a unique transaction code is used to process your payment. These details are not the same as your personal card number and are a security feature which can be accessed if you follow the instructions to suspend the card in your digital Wallet. Some contactless readers may even require you to set a certain default card on your Wallet app by dragging the relevant card to the front. Competitive technology such as Contactless Mobile may require you to enable the reader to recognize that Apple Pay is used so keep an eye out for any instructions displayed on the reader in the assistance area. 3. If you are making a payment within certain apps which feature the Apple Pay button, your phone may offer the Apple Pay option as an action extension. This is a shortened version of the full app that provides specific functionality related to what you want to do, such as making payments. All you need to do is to tap the Apple Pay button and use Touch ID in order to confirm your payment. There’s no need to actively open your Wallet. 4. On the iPad, you can use Apple Pay to make payments within certain apps and in Safari. If you are using Safari, look for the Apple Pay button at the checkout section and complete your order by using Touch ID on models with Touch ID or the Face ID on those which have it. To make a payment within an app, select the Apple Pay option and then use Touch ID to confirm, as you would with the iPhone. Bear in mind that to set up and use all aspects of Apple Pay, you need the following: an eligible device with the latest version of iOS, watchOS or macOS, an iCloud account, if you are using a mobile data plan, you will need a SIM and mobile data capable device and for the iPhone and Apple Watch, a JDQ13 supported Open Payment. Such Open Payment are designed to support mobile payment use in public transportation systems that currently allow the usage of contactless payment cards and they must be in both the device and the transit service for use.

3.1. Making In-Store Payments

Apple Pay is simple to use in-store. First, look around to make sure your phone screen is visible to the sales assistant. Then, hold your phone near the contactless reader with your finger on Touch ID – the transaction will be accepted in seconds. For the iPhone X, you’ll need to double-click the Side button then use Face ID and hold the device in front of the reader to approve the transaction. When using Apple Pay, please ensure the following: Your device must be switched on. Please do not disconnect or remove the device during the payment process. Do not cover the sensors at the top of the screen, near the earpiece, as this can disable the communication between your device and the contactless reader. Your iPhone will vibrate and may display the word ‘Done’ on the screen when the purchase is accepted. Also, your Apple Watch will vibrate when the purchase is accepted. On some terminals, you may also need to enter your PIN after the Touch ID confirmation. This is because when the PIN is entered on the contactless reader instead of the device, the PIN is encrypted and your bank can make sure that the payment is coming from your device.

3.2. Making Online Payments

When shopping online or within apps, the process for making a payment with Apple Pay is similar to making an in-store payment. When you’re ready to check out from your shopping or payment app, it will prompt you to choose a way to pay for your purchase. When you’re shopping online, Apple Pay is the easier way to pay. When you’re checking out at a website and Apple Pay is a payment option or when you’re paying within an app on your iPhone, iPad, or Mac, selecting Apple Pay as the payment method is as simple as choosing the “Pay with Apple Pay” button and placing your finger on the Touch ID. On the iPad Pro, simply double-click the side button and glance at the screen to authenticate with Face ID and pay. And if you’re using a Mac and the merchant offers Apple Pay as a payment option, simply tap the “Buy with Apple Pay” button, review your payment and shipping information, then place your finger on Touch ID to complete your purchase. Make sure you’re signed in to the same iCloud account on your iPhone, iPad, Mac, and Apple Watch and have Bluetooth enabled on your device. Also, be sure that your Mac or iPad Pro has “Allow Payments on Mac” or “Allow Payments on this iPad” turned on and that you’re not using an unsupported browser. Now that you know the many ways to use Apple Pay, why not start using it and benefit from the ease of making payments in shops, restaurants, taxis, vending machines, in apps and on the web?

3.3. Sending and Receiving Money with Apple Pay

Anyone familiar with counterpart apps will understand the overall simplicity of selecting a card from Wallet (if there’s more than one available) and entering the amount of money wanting to be sent. However, without going into that too much, those sending money don’t particularly need the specific app. Whether wishing to send money directly through a message, or whether perhaps in Siri or even from other apps, the method is very similar. Also, the sequence of recognizing someone through iMessage and that person’s contact details will closely resemble the norm for this kind of system. It is impressive how Apple has managed to simplify the overall process – rather than needing to go through a number of stages, only the amount of money is now a vital option before finally giving recognition to confirm the sending of this money.

On the other hand, to get paid, one must: – have iOS 11.2 or later – a compatible device – be signed in to iMessage and the Apple ID pertaining to that account (Being signed in to iMessage is crucial here since all money will be received as a message which then needs to be accepted; again, this is essentially more enhanced security.)

To send money with Apple Pay, users will need to have: – a compatible device – iOS 11.2 or later – two-factor authentication for their Apple ID – an eligible debit card in Wallet (for generally, only something like Visa Electron is permitted)

3.4. Using Apple Pay in Apps

On your iPhone or iPad, open the app. Tap the item you want to buy and add it to your bag. Find and tap the Apple Pay button. If you want to change your billing or shipping information, you can do so. Tap the information and make changes. If you don’t want to change anything, the process is even faster. When you’re ready to complete your purchase, double-click the side button and glance at your iPhone or iPad. You don’t have to wake your device or open any apps. A blue bar will appear at the top of the screen, confirming that you’re ready. Hold the top of your iPhone or the display of your iPad near the contactless reader. Wait until you see Done and a check mark on the display. That’s it! You don’t have to confirm payment with Face ID, Touch ID, or your passcode. The amount of your purchase will appear on the display as shown. You’ll also receive a confirmation email.

To pay with Apple Pay within an app:

4. Security and Privacy

Apple has built numerous security features into Apple Pay. One of the main features supporting Apple Pay security is fingerprint recognition technology. When you set up Apple Pay, you are prompted to enroll fingerprints of the eligible device users. Your fingerprint data is securely stored on the device, never on Apple servers, and is never shared with the phone or system. When making a transaction with fingerprint authorization, your fingerprint scans and identity verification actually take place in a specialized area of the phone’s internal logic board, an area known as the Secure Element. This is a dedicated co-processor that runs its own specialized operating system and is designed specifically for security-sensitive operations such as payment processing. In order to complete a successful payment with Apple Pay, a transaction’s digital process undergoes a number of verification phases within the Secure Element. Your fingerprint must be recognized by the integrated Touch ID system, and the encrypted fingerprint data must be confirmed to reside on the authorized device. Every successful payment completed with Apple Pay must be authorized with a fingerprint or device lock code. The process of generating, transmitting and completing the digital payment token is tightly controlled and, at no point, is your actual financial data ever shared by the device. Not having to enter your credit or debit card number and CVS code on website or repeatedly at the point of sale is certainly a great feature of Apple Pay that finds appeal with many users. In fact, when you use Apple Pay to make a purchase at a merchant site or within an app, there are no financial details accessed or collected by Apple. In-app purchases through Apple Pay represent a confidential solution to online shopping and one less avenue for identity thieves to exploit. By providing your shipping and billing information to Apple Pay when prompted, and you profess to save time and protect against unauthorized credit card activity. Naturally, this is because your financial details remain encrypted and unknown to the merchant.

4.1. Apple Pay Security Features

One of the most common worries for people who are making the switch from cash to mobile payments is the security of their money. Apple Pay has a number of features to make sure that your money and your personal details are kept very secure. Firstly, your card numbers are not stored on the device that you are using to make the payment. With Apple devices, your card number isn’t even stored on the device. If a store needs your card number but you don’t have an internet connection, you can use your device settings to find the first 6 and last 4 digits of your card number to help you complete the payment. This means that your card number is never transmitted or shared with the store during a transaction. Every payment that you make with Apple Pay is secure because it requires you to authenticate each payment. This means either using your touch ID, your passcode, or your face ID to successfully complete the transaction. Additionally, your device creates a unique token for each payment. This means that your card number is not actually used in your transaction. Instead, Apple Pay works by substituting sensitive information like account numbers with non-sensitive information like a token. This token is also combined with a unique transaction code. So even if someone could intercept the payment, the information would be useless to them.

4.2. Protecting Your Personal Information

With Touch ID, you can authorize your payments with your fingerprint. Each fingerprint is unique, so you can ensure that only your fingerprint can allow the payment to go through. Touch ID also means that you do not have to type in your payment information unnecessarily, which could get intercepted by a “fake” app. For instance, if a fake counterpart of the Starbucks app was created and you were tricked into using that instead of the real one, any usernames and passwords you entered could be extracted by the imposter. However, with Touch ID, the user is never required to directly enter such things and the security of Apple Pay does not rely on the user’s ability to be constantly vigilant. Instead, transaction authorization is tied with biometric security, which has been seen by experts as a substantial advancement over chip and pin card transaction security. This is because it approaches two-factor security, where rather than just using something the user knows (like a PIN) and then having a third party check it (like a bank), the user provides something they have (the device) and something they are (a biometric measure). The data in a payment token is secure because it is not the full credit or debit card number, but a randomized identifier assigned to the customer’s card. Even if a hacker or fraudster could gain access to a merchant’s system and take a copy of their complete card transaction history, the information they would acquire would be essentially useless for making fake transactions or stealing actual funds. This combination of security, ease of use, and privacy makes Apple Pay a compelling choice for digital payment, and it is likely that such technology represents the future of consumer transaction methods.

4.3. Managing Apple Pay Settings

Once you add a card to Apple Pay, you can manage it in settings. There, you can change its settings, view transactions, and see the terms and conditions. If your iPhone and Apple Watch models can be used with Apple Pay, you can add your cards from the iPhone that you use with Apple Watch. To add a card to an Apple Watch, you need to open the Apple Watch app on your iPhone. Tap ‘My Watch’, tap ‘Wallet & Apple’, and then you can add the card in a similar way to just described. You can also add your card on your MacBook Pro if it has a Touch ID sensor and you have a newer iPhone model. If you have a newer iPhone X or later, you can add a card on your Mac even if it does not have a Touch ID sensor. You’ll need to be signed in to iCloud with your Apple ID on your MacBook Pro and your iPhone, and you’ll need to have Bluetooth enabled on your iPhone. 363-488. After you add a card to Apple Pay, you can manage it in ‘Settings’ “Wallet & Apple Pay on iOS’ or ‘watchOS settings for Wallet & Apple Pay’. There, you can change its settings, view transactions and view the terms & conditions. If your iPhone and Apple Watch models can be used with Apple Pay, you can add your cards from the iPhone that you use with Apple Watch. To add a card to an Apple Watch, you need to open the Apple Watch app on your iPhone. Tap ‘My Watch’, tap ‘Apple Watch’, and then you can add the card in a similar way to just described. You can also add your card on your MacBook Pro if it has a Touch ID sensor and you have a newer iPhone model. If you have a newer iPhone X or later, you can add a card on your Mac even if it does not have a Touch ID sensor.