Apple Pay may be the first widely successful electronic payment system using near-field communications (NFC), despite the feature being available on phones for the last few years. The difference between Apple Pay and other similar phone-based payment systems is that Apple has managed to build a significant level of buy-in from merchants and credit card companies. But perhaps more important, is that many of those vendors are big, nationwide chains ranging from Macy’s to Subway.
Equally important is that Apple also managed to bring a number of major banks on board for the launch, including American Express, Bank of America, Citi and Chase. What this means is that, regardless of your carrier, you could start using Apple Pay on launch day in the U.S., which was Oct. 20. In more good news, other banks are coming on board by the end of 2014, as are more merchants.
Another factor that should help Apple Pay be a success is that, for the most part, the same point-of-sale (POS) terminals that these merchants need to work with EMV chip and PIN technology are the ones that support Apple Pay. With a very strong move to upgrade credit card security already under way, Apple Pay is in line to be adopted as part of the solution.
But there’s always a question of how well this payment system works. After all, if it’s impossible to use, nobody is going to adopt it. To find out whether this whole thing hangs together, eWEEK set out to try Apple Pay in the real world.
First things first. The iPhone 6 I tested earlier in October needed an update to iOS 8.1. I had misgivings about this, since Apple’s update servers are frequently overloaded on the first day of a release, and iOS 8.1 was also released on Oct. 20. However, in this case I was successful within a few hours. The download itself is nothing unusual, requiring that you agree to the terms of service and so forth. Overall, the entire process took about a half hour.
Once that was finished, I needed to set up Passbook, an iOS app that acts as a single repository for such things as loyalty and payment cards and that has now morphed to include Apple Pay. Apple says that your default credit card for Apple Pay will be the one that’s on file in iTunes, but the credit card that was there was actually the one I used most recently at an Apple Store. This meant that my corporate credit card was the one that showed up when I started.
In any case, you will need to add credit and debit cards to Passbook. You do this by placing the card on a flat surface and taking a photo of it with the built-in camera. Passbook will ask you for the CCVN (credit card verification number). You can also enter your credit card information manually.
Depending on the policies of your credit card issuer, you may need to verify your card in some way. For example, my debit card required a call to the bank to confirm that I was adding it to Apple Pay.
Once I’d accomplished the task of adding cards, I headed out to buy something. The two stores I chose were BJ’s Wholesale Club, where I used my debit card, and Wegmans, a grocery chain in the Northeast. Both were launch partners with Apple Pay.
At BJ’s, I scanned my purchases, opened Passbook on my iPhone and selected my debit card. When the phone was held near the card reader, I was asked to place my finger on the home button (which also reads fingerprints) to confirm the purchase. Once I did that, I was asked to enter my debit card’s PIN on the number pad on the card reader.
At the grocery store, I used my loyalty card that was available from the Wegmans app, then I opened Passbook again, this time selecting a credit card. Once again, I held my iPhone near the card reader, and the transfer of data took place once I placed my finger on the home button. In each case, the phone beeps and vibrates briefly to indicate that the transaction has happened.
What’s important for security is that in neither case was my card number transferred to the merchant. While the last few digits of the card appear on the pictures of the card in Passbook, they are never sent to the merchant. An inspection of the receipts revealed that Apple instead supplies a virtual number to make the transaction.
The entire process was actually easier than I’d feared, and it doesn’t require any action on the part of the cashier. At BJ’s, I was using a self-checkout terminal. At Wegmans, the cashier watched with interest and told me that I was her first Apple Pay customer.
Apple Pay can also be used for in-app purchases for some vendors with the iPhone 6, the iPad Air 2 and the iPad Mini 3. However, I didn’t try that method. Unfortunately, Apple Pay isn’t available for earlier versions of the iPhone, since they lack the NFC hardware, and it’s not available for earlier versions of the iPad, since they lack the Touch ID fingerprint reader.
While Apple Pay works well for end users, it will be more helpful as more merchants and more banks join. Nonetheless, this is still a very positive step in payment card security, and its chances of success are vastly improved by being easy to use and widely supported.