NEWS ANALYSIS: The upcoming Apple Pay NFC system will complement, not disrupt, the current card and mobile ecosystem by using current infrastructure.
Apple’s Sept. 9 introduction of the Apple Watch and the two new, larger iPhones was big in the device world, but the most important long-term news clearly was CEO Tim Cook’s announcement of Apple Pay.
“Every day between credit and debit, we spend $12 billion. That’s more than $4 trillion a year, and that’s just in the United States,” Cook said in introducing the new payment system at the company’s Sept. 9 launch event in Cupertino, Calif. “We think we have a better way to handle those transactions.”
If Apple Pay works, it can be a major game-changer in the U.S. economy. Devices like smartphones and watches come and go, but a payment method that is simple to use and cuts security problems off at the knees could be around for a long, long time.
Apple Pay (shown in photo) is an NFC (near-field communications) payment system that uses a special chip to send a radio signal between the device and the point-of-sale receiver, which is usually a computer terminal at a cash register. It requires either an iPhone or Apple Watch to touch the device; a biometric (fingerprint) second ID is also required. There is no card number entry and no need to type addresses. No personal account information is shared with the merchant or with Apple. The transaction data—and it’s all encrypted—remains between the bank and the buyer; the merchant simply ends up with the money in his/her account.
Progress in Mobile Payment Industry Has Stalled
This is a huge step forward from the now-simplistic plastic, magnetic-stripe credit/debit cards that have been breached innumerable times in their 50-year history. Other providers, such as PayPal, Google Wallet and Square, have reached a certain
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