updated - October 16, 2021 Saturday EDT
Apple Pay is Apple's new mobile payment service, which lets iPhone 6, 6 Plus, and Apple Watch owners in the United States to make payments using NFC with their devices in October 2014.
Using a near-field communication or NFC chip built into the iPhone 6, the iPhone 6 Plus, and the upcoming Apple Watch. Transactions are secure because Apple uses a method known as "tokenization," that prevents actual credit card numbers from being sent over the air. Apple also secures payments via Touch ID in the iPhone 6 and skin contact with the Apple Watch.
According to Apple CEO Tim Cook, Apple Pay will "forever change the way all of us buy things."
Apple Pay requires only a single step on making a purchase using the service at a retail store. Just hold an iPhone near the payment terminal of a participating merchant while a finger is on Touch ID. Online payments in apps are also reduced to a single tap with Apple Pay, also confirmed via Touch ID. Apple is aiming to replace the wallet with Apple Pay, and the one-step process averts people from needing to dig through a purse or wallet to find credit cards.
According to The Verge Apple Pay functioned "remarkably smooth," and was called as the "smoothest payment system" the testers had seen. Touch ID was said to add a "real sense of security." While SlashGear also called the Apple Pay process "pretty darn easy" and said that it was much faster than pulling out a credit card, swiping it, and typing in a PIN or signing a receipt.
Passbook is a key element of Apple Pay. Once the service is enabled through an update to iOS 8, the credit card that is attached to a user's iTunes account will be transferred automatically to Passbook, so it will basically work "out of the box." Using the phone's camera, you can also upload additional credit and debit cards to Passbook. When a purchase is successfully made with Apple Pay, users will feel a subtle vibration and hear a beep to confirm the purchase is complete.
However, Apple Pay is only available within apps that have adopted the Apple Pay API and to make a payment in a retail location, the shop will need to support Apple Pay directly or allow NFC payments. The Apple Watch, which does not function without an iPhone, will allow owners of older iPhones, including the iPhone 5, 5c, and 5s, to use Apple Pay.
When it comes to security, Apple has placed a heavy emphasis on it to assure iPhone owners that their payment information is safe, and, in fact, safer on an iPhone than inside of a wallet.
When a credit or debit card is scanned into Passbook for use with Apple Pay, it is assigned a unique Device Account Number, or "token," which is stored in the phone rather than an actual card number. The iPhone itself has a special dedicated chip called a Secure Element that contains all of a user's payment information, and credit card numbers and data are never uploaded to iCloud or Apple's servers.
Apple also authenticates each transaction through Touch ID. Where user must place a finger on Touch ID for the payment to proceed. With the Apple Watch, verification will reportedly be done through skin contact. When the watch is placed on the wrist, a user will be prompted to enter a passcode. After a passcode is entered, as long as the device continues to have contact with the skin (which is monitored through the heart rate sensors), it will allow payments to go through. If the watch is removed and skin contact is lost, it can no longer be used to make payments. So Apple users need not to worry about losing their iPhone or Apple Watch.
Furthermore, if an iPhone is lost, the owner can utilize Find My iPhone to suspend all payments from the device, without needing to go through the hassle of canceling credit cards.
In light of recent matters with iCloud, Apple has been careful to point out that it does not store or monitor the transactions that people make with Apple Pay.
"We are not in the business of collecting your data," said Eddy Cue during the keynote speech introducing Apple Pay. "Apple doesn't know what you bought, where you bought it, or how much you paid. The transaction is between you, the merchant, and the bank."
Apple's major credit card partners in the United States: Visa, MasterCard, and American Express.
Apple's major bank associates: Bank of America, Capital One, Chase, Citi, American Express, and Wells Fargo. Barclaycard, Navy Federal Credit Union, PNC, USAA, and US Bank are in the process.
Several popular retailers that accept Apple Pay: Macy's, Bloomingdales, Walgreens, Duane Reade, Staples, Subway, McDonald's, Whole Foods, and Disney; both at Disney Stores and at Disney World and Apple's own retail stores.
Apple has also worked with several retailers that are developing apps that will accept Apple Pay, including Groupon, Panera Bread, Sephora, Target, Starbucks, Uber, Disney, Instacart, MLB.com, Tickets.com, and OpenTable.
Apple plans to release Apple Pay in October, with an update to iOS 8. An exact date has not yet been announced but October 18 is on the watch.
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