A Look At OS X Yosemite And iOS 8.1
by Brandon Chester on October 27, 2014 8:00 AM ESTApple's Foray Into Payments
Apple has made two announcements this year that show an expansion into areas outside of the technology industry. The first was Apple Watch, which is most definitely a technology product but looks positioned against the current premium watch industry just as much as against current smartwatches on the market. The second was Apple's foray into the payment industry, Apple Pay. While Apple Watch won't be around until next year, Apple Pay is here right now with one caveat. Apple Pay currently only works in the United States, or more specifically, only with a credit card issued by a United States bank. However, the service will eventually be expanded to support cards issued by banks in other countries.
How Apple pay works is fairly straightforward, that's the entire point of it. If the region on your device is set to the United States, the passbook app will contain a card that allows you to add a credit or debit card. You can then either type your info in, or use your camera to get the information from the card. Once the card is verified by your bank, you will have a card that appears in passbook and you're ready to start using Apple Pay. From the user's perspective, Apple Pay is simple and easy to use. But what goes on behind the scenes to keep everything secure can be quite complicated.
Security
The first thing to know is that your credit card information is never stored on the phone. Upon adding a credit card, the information is encrypted and sent to the appropriate issuing bank which confirms that the card is valid. A token is then sent back to the iPhone and stored in the secure element, which is essentially just an internal smart card chip. This token, not your credit card number, is what is used during payments. Apple's marketing and technical material refers to it as a Device Account Number. The token itself resembles a credit card number, but the only similarity between it and your card is the 4 digits on the end.
The use of tokens is where much of the security of Apple Pay comes from. By removing the actual credit card number from the equation, the merchant you're paying never gets to see your credit card number, security code, or your name. The token presumably is also only linked to the actual credit card via some database held by the bank, rather than some sort of equation that could be reverse engineered. This means that even in the event where a merchant is hacked and your token number shows up, it is entirely useless because it does not function as a credit card and is tied to the iPhone it was used on.
Beyond the overarching security, there's additional security at the time of payment. It begins with the use of Touch ID for authorizing payments. Although Touch ID launched with the iPhone 5s which does not have the necessary NFC hardware to use Apple Pay, I believe that this sort of service was the original goal when Touch ID was first being created. Paying with Apple Pay requires using Touch ID to verify your fingerprint. This prevents anyone from making purchases using your iPhone if it is lost or stolen.
One thing to note is that Apple Pay is not just a service for making purchases in stores. It also works for making purchases at online retailers than integrate it into their applications. All the security features that I've described apply to both in-store and online purchases, so there's no compromises on either side.
Going Forward
Making Apple Pay successful is going to take a lot of work on both Apple's part and on the part of retailers. Currently the service only works with cards from US banks, leaving out the rest of the world. Apple needs to expand the service much quicker than competitors have done so with theirs. For example, Google Wallet remains a US only service over 3 years after its initial launch. Apple Pay is not going to achieve success if it ends up in the same situation. Apple has given no timeframe for expansion to other countries, but if the iPhone 6 and 6 Plus get replaced by newer models before Apple Pay expands outside the US it will be a worrisome situation.
Apple also needs to convince retailers to support the service. The list of supported merchants on the Apple Pay section of their website has grown since its initial launch, and if Apple Pay is ever going to be a viable way to make everyday purchases that list needs to continue to grow. Work by banks to increase adoption of NFC capable terminals will also speed up this process, as Apple Pay works with existing NFC enabled checkouts. Apple also faces resistance from retailers that are partnered with other payment systems. Recently there have been reports that merchants who support the CurrentC mobile payment standard are disabling NFC on the payment terminals in their stores to block Apple Pay. I don't believe this will be an issue in the long term because consumers will realize when companies are prioritizing their own agenda over the customer's experience and they'll go to other retailers. If Walmart won't support Apple Pay and a customer wants to use it, they'll just go to Target instead.
As someone who doesn't live in the United States, I'm hopeful that the service will expand to Canada before this iPhone becomes obsolete. There are many obstacles in the way, but Apple appears to have put more effort into working with banks and merchants to get the service off the ground than any of the other mobile payment services we have today. How things play out will only be revealed with time.
Facebook
Twitter
RSS
173 Comments
View All Comments
EnzoFX - Saturday, November 1, 2014 - link
Do you really think the average joe is removing screws and changing ram? loldesignerfx - Tuesday, October 28, 2014 - link
I see you skiping over the soldered ram and battery part. Let me assure you, that matters just as much as forcing things to be command line is equally stupid. That's the opposite of good UX design.cgpublic - Monday, October 27, 2014 - link
"As a long term OSX power user and a long term Android power user I feel constantly dissapointed by OSX updates." If you say so."I certainly understand Apple efforts to unify their experiences and make them consistent under the same ecosystem. That's good for their business." It also provides a benefit to users.
"Unfortunately I'm on a situation where OSX for me is more a handicap than something I'd like to pay for, and that's something which is reinforced on every single release." Handicap? Compared to Linux or Windows? Please expand this thought. Also, you are not directly paying for OS, you pay for the HW.
"I will not use a system which is focused to my grandma and obfuscates all the advanced features under complex bash commands in an effort to make them not available to the users. I will not buy a 2K laptop with soldered RAM and battery, let alone the stupid joke the new iMac is." The purpose of a GUI to simplify user interaction. You can choose Terminal if that is your preference. Also, there are very real technical benefits to soldered RAM and non-replaceable batteries. The new iMac is the best desktop for most users at that price point, i.e., fastest and best display.
"I'm sad, because OS X has been my main driver for some many years. But I'm not buying the Apple ecosystem, and apparently that's all that Apple wants to sell now." I guess Apple should be focused on selling other systems, say Microsoft, Google or Samsung. I can't say if you are paid to post this drivel, but if you are, you're overpaid.
Speedfriend - Tuesday, October 28, 2014 - link
"Unfortunately I'm on a situation where OSX for me is more a handicap than something I'd like to pay for, and that's something which is reinforced on every single release." Handicap? Compared to Linux or Windows? Please expand this thought. Also, you are not directly paying for OS, you pay for the HW.I am with him on this, since I upgraded my iMac to Mavericks I have found it a pain to use, especially around saving and access commonly/recently used files. Now I am sure that I could spend some time finding out how to do it better, but I use a windows machine at work so have now bought a win 8 laptop with touch screen which is a revelation in useabilty. somethings are just so much easier and more natural with atouchscreen given we spend all days using them on phones and tablets. I haven't touched my iMac in months now.
And off course you are paying for OS, otherwise Apples margins would be 5% and not 30%
techconc - Tuesday, October 28, 2014 - link
LOL! Really, you're having trouble accessing recently used files? Seriously? You must not really have a Mac, because even the most novice users don't struggle with such things. Seriuosly, where do you think the "Recent Items" feature from Windows came from?http://www.makeuseof.com/tag/6-ways-to-locate-rece...
serons - Monday, October 27, 2014 - link
I very much agree with this sentiment, and for the same reasons. They have green ambitions when building power generation for them selves and when building their product but expect us consumers to buy a completely new product if a component fails or if we wish to upgrade. That's very environmentally wasteful, inefficient and expensive. No way.ViewRoyal - Monday, October 27, 2014 - link
"expect us consumers to buy a completely new product if a component fails or if we wish to upgrade."If a component fails, and you are still on warranty, you get your entire Mac replaced. The one that you exchange gets refurbished and sold as a refurb. That's NOT "environmentally wasteful, inefficient and expensive" at all!!!
If a component fails, and (as in most cases) it is due to a defective component (and not due to misuse) Apple has covered these instances with extended warranties. I had an iMac G5 that had a capacitor burn out in its 4 year of use. This was a known defective component, and Apple replaced it with a current iMac with Intel processor at no cost to me.
Some Macs have user upgradable RAM, and some Macs don't. Those that don't are usually lower end, so it is important to buy one with the RAM you need. Nobody complains because they can't upgrade the RAM in their smartphone or tablet, so you should be used to this, especially in a Mac that costs less than the full price of a smartphone or tablet!
All Macs have upgradeable internal storage, either by the user, or by an Apple Store or certified Apple provider. In addition, all Macs come with USB 3.0 and Thunderbolt connectors for fast external storage. So internal AND external storage is definitely upgradeable!
Your complaints really have no merit.
blackcrayon - Monday, October 27, 2014 - link
It's actually hard to overestimate how great it is to have Thunderbolt on non Macs that never had pci slots (mini, iMac, Air). 2 Thunderbolt ports offers more expansion opportunities than ever.HKZ - Monday, October 27, 2014 - link
"Your complaints really have no merit."Bullshit they don't. I'm on my second GPU on my 2011 MBP and probably going to have to have a third soon since I have absolutely zero confidence that it'll last very long. A $3000 machine that lasted about 4 months past its warranty and then became 100% useless. Apple's solution despite the rash of failures and repeated petitions to have them recognize a widespread failure? Pay them $700 for an in-house replacement or $300 from a third party. I paid $3000 for a machine that *barely* lasted past its warranty before it became completely useless and Apple REFUSES to recognize they have another serious problem on their hands and REFUSES to extend the warranties of the machines affected.
Your inability to recognize reality makes me question your objectivity. Apple has a huge problem on its hands that they have 1000x the cash to instantly solve by replacing the machines wholesale and they completely refuse to acknowledge the problem exists.
mrd0 - Thursday, October 30, 2014 - link
I agree. I went through two MBP's and the third just crapped out. I'm done.