There are new payment methods for credit cards being released of which on is Apple Pay. This process uses a Near Field Communication antenna to transmit a transaction and the Touch ID to authorize the transaction without cards, IDs, or apps. See the full list of participating banks, retailers, and applications here.
Apple Pay does not save credit card details on servers, devices, or in the cloud and instead uses secure tokens representing a credit or debit card number. “Cashiers will no longer see your name, credit card number or security code, helping to reduce the potential for fraud,” said Eddy Cue, Apple’s Senior Vice President of Internet Software and Services. “Apple doesn’t collect your purchase history, so we don’t know what you bought, where you bought it or how much you paid for it. And if your iPhone is lost or stolen, you can use Find My iPhone to quickly suspend payments from that device.”
As some of you may be aware, credit card companies will be updating from magnetic stripes to chip and PIN technology this fall meaning that merchants will have to update their payment terminals. This new chip and PIN technology, also known as EMV, reduces the risk of fraud for in-person transactions by requiring second authentication and increasing the difficulty and cost of card cloning. By the end of 2015 fraud liability will fall on banks who fail to issue these cards or merchants who fail to update their payment terminals. As such merchants may consider payment systems that are both EMV and NFC friendly, which would benefit Apple Pay.
Despite Apple’s strategic moves and security measures less than 10% of retailers will be accepting this form of payment. And although Apple Pay does not require an app there are companies who accept Apple Pay through their apps. Online payment gateway providers like Stripe, Authorize.net, and Braintree will all support Apple Pay by allowing online merchants to integrate the Apple Pay feature.
Apple Pay is still in the experimental phase and it is recommended retailers hold off on adapting this technology. Small and medium sized business should carefully consider this option as NCF readers can cost about $300 per device not including back-end setup and staff training.