Apple Pay Could Be a Credit Card Security Game Changer
NEWS ANALYSIS: Apple introduces some much-needed improvements in how payments are handled over payment card networks, boosting security and privacy.To absolutely no one's surprise, Apple announced the iPhone 6 on Sept. 9 in the usual over-the-top event, complete with a short concert by legendary rock band U2. There are actually two versions of the iPhone 6, the standard one and the 6 Plus, which has a larger screen, better battery life, and some features such as optical stabilization for the camera. The new iPhone is probably the biggest departure from its predecessor of any iPhone. Besides having a new and faster processor, the 6 comes with more memory on most models, better mobile radios, better WiFi, a better camera, a more flexible user interface, and even a one-handed keyboard reminiscent of the one on BlackBerry 10 devices. But the most significant improvement to the iPhone's user experience comes from a feature you can't see and which may be more important than any of the others. That new feature is Apple Pay. While Apple Pay is a wallet app, the differences between it and other digital wallets is significant. In addition to being supported by MasterCard, Visa and American Express, Apple Pay effectively virtualizes your credit cards so that the merchant never gets the number. Instead it stores an encrypted version of the card using a chip called the Secure Element.
The way it will work when it starts operating in October is that consumers will take a photo of their credit cards using the iPhone 6 camera. The first card becomes the default payment card, but any number of other cards can be added as well. The iPhone will let them make a payment using Near Field Communications (NFC) and a wireless enabled card reader, of which there are many.