What Is Apple Pay?

Posted by Ryan Raubenheimer on

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Apple Pay is a contactless payment technology that is integrated as standard with the latest generation of iPhones, iPads, and Apple Watches. In essence, Apple Pay’s functionality is designed to replace the need for a physical wallet containing debit and credit cards. The technology pulls card and other payment data from the Wallet app and allows the shopper to use their iPhone or Apple Watch as an all-in-one contactless payment card.

Where and How Does It Work?

Apple Pay was launched in the US in October 2014 and is now available in Australia, Canada, the UK, Singapore, and China. Launch dates for additional territories are expected shortly with Japan, Brazil, and Hong Kong expected by the end of this year. It works through contactless payment systems; anywhere a contactless payment symbol is visible Apple Pay should be available.

Apple Pay first launched in Australia last year via an exclusive tie-up with American Express. As of April 27, 2016, ANZ customers can also integrate their debit and credit cards with Apple Pay with other major providers expected to follow shortly. Apple Pay can be used in any retailer that already operates a contactless payment system.

Apple Pay also has an API, meaning that it can be used to make purchases via apps. Many airlines for example, have apps that support Apple Pay through which users can purchase airline tickets.

Apple Pay is able to be fully integrated with an iPad Stand or POS tablet system, allowing for a more streamlined simpler way for retailers to manage the sales process.

 Apple Pay is fully integrated with the Apple Watch.

Is It Secure?

As with contactless payment cards, the touch and go functionality works only for purchases up to a certain value, $100 in Australia. Higher value purchases still require a PIN. Also, as with cards, Apple Pay uses tokenization technology which means that retailers never have your card details and they are also not stored on Apple’s servers.

The major concern for users is of course the additional worry if a phone is lost or stolen. The relatively small sums which can be spent without a PIN number is the first layer or protection. Also, users can use their ‘Find My iPhone’ account to put their phone into ‘lost’ mode, which locks the phone and prevents access to Apple Pay.

Apple Pay Cost and Set-Up for Retailers

For retailers who already have a contactless payment system set up, they will almost certainly be able to accept Apple Pay via all card providers who support the system, currently American Express and ANZ, though all major providers can be expected to have integrated support in the near future.

Transactions cost exactly the same as any other ‘card present’ transactions. Apple Pay is simply a bridging technology which allows the device to function in the same way as the contactless cards held in the Wallet app. Retailers who do not currently have a contactless card payment system can contact their payment provider and request a terminal to be installed. For app-based purchases, Apple Pay payments will be charged as card-not-present transactions.

Adoption of Apple Pay has grown by 500% over the past 12 months with the company reporting one million new users a day.

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