Using Apple Pay the First Time

On 10/20/2014, Apple Pay, Apple’s mobile wallet,  became available on iPhone 6 and 6+. I couldn’t wait to give it a try.

To use Apple Pay, iPhone consumer needs to do two things:

  • Add a credit card / debit card into the Passbook
  • Download iOS 8.1

Apple Pay is integrated into the Passbook through iOS 8.1; there is no need to download an app. When you add your card to Passbook, a unique Device Account Number (DAN) is assigned to it. DAN is encrypted and stored in the Secure Element (SE), a dedicated chip in iPhone. DAN is used in payment process instead of your actual card number.

When you are ready to use Apple Pay:

  1. Place your finger on Touch ID

  2. Point your iPhone6 at the contactless reader

NFC (Near Field Communication) enables this contactless payment. The Device Account Number, along with a transaction-specific dynamic security code, is used to process the payment. Your actual card number is not shared by Apple with merchants or transmitted during the payment. Apple doesn’t store any of the details of the transaction. This security protects the consumer.

The steps I took to use Apple Pay were as follows:

  • Downloaded iOS 8.1 by going to Settings, General, Software Update.

  • Configured my iPhone 6 as instructed after downloading was completed.

  • Clicked on the Passbook app.

  • Clicked on the + sign on the top right corner to add my business VISA from Alaska Airlines.

  • Used camera to read my card and typed in Expiration data & security code. iPhone 6 showed “Verifying Card” a few seconds and returned “Your Issuer Doesn’t Not Yet Offer Support for This Card”.

  • Added my America Express Card successfully and saw the recent purchase history at Costco since September. That surprised me.

  • Added my personal VISA from Alaska Airlines successfully.

  • Went to Wholefoods and used Apple Pay for my purchase. Since Touch ID had trouble reading my fingerprint; the passcode screen was displayed that enabled me to enter my passcode.

  • Apparently VISA from Alaska Airlines is my default card. The purchase history at Wholefoods is accessible from the phone (see attached picture) and Bank of America also sent me notification of the purchase.

  • Removed my America Express from the Passbook and was sent a notification that read: “Your Default Card Has Been Changed to “BofA Visa Credit”. That is a minor bug since BofA Visa was my default card, wasn’t it?

In general, Apple Pay is easy to use. I think NFC will be promoted through Apple Pay’s good user experience and tapping will become a habit soon. Job well done! Apple.

EMV and NFC Adoption

Are you a victim of the recent Target credit card breaches? Today, most US credit cards use a magnetic stripe to read and record account data and signatures for verification. This mechanism became vulnerable to fraud when technology emerged to enable the illicit reading, writing, and subsequent cloning of these magnetic stripes. Recent data breaches at Target and Neiman Marcus demonstrated these vulnerabilities.

EMV (Europay, Master card and Visa) standards were created to reduce counterfeit such as this. They have been specifying interoperability between EMV-compliant chip cards and card payment terminals throughout the world for over a decade. Banks in many countries adopted the technology and started to use chip cards. Chip cards have a microchip embedded in them. The majority of the implementations of EMV cards and terminals confirm the identity of the cardholder by requiring a PIN (Personal Identification Number).

In spring 2009, Canada Trust announced the adoption of EMV standards and explained what a chip card was in an article titled “Payment Card progress: what it means to your business”. The article stated that one of the new fraud prevention technologies that may have the most immediate impact on how merchants do business is the chip card. The chip card is a contactless card with a microchip and a radio antenna embedded inside. It can be simply waved in front of a secure, contactless reader for a secure way to pay.” These chip cards used by Canada Trust use RFID technology.

As the world is moving to a more secure way to implement credit card purchasing, one might wonder why the USA adoption of this technology is delayed, and what the impact of this delay is.

To me, two big potential impacts might be:

  • More credit fraud will happen in the US since the rest of the world is using more secured cards.
  • NFC mobile payments are a less attractive option for consumers since NFC technology might take a while to be adopted.

What is your thought about this?

See more information about EMV here.