Apple has launched a new mobile payments system, Apple Pay, which will allow people to make purchases by holding a phone near a sensor.
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Apple Pay works with iPhone 6 and iPhone 6 Plus through a NFC antenna design, a dedicated chip called the Secure Element, and the security and convenience of Touch ID. Apple Pay will also work with the newly announced Apple Watch, extending Apple Pay to over 200 million owners of iPhone 5, iPhone 5c and iPhone 5s across the world.
Apple said that its new mobile payments system supports credit and debit cards from the three major payment networks, American Express, MasterCard and Visa, issued by the most popular banks including Bank of America, Capital One Bank, Chase, Citi and Wells Fargo, representing 83% of credit card purchase volume in the US.
Apple Watch will also work at the over 220,000 merchant locations across the US that have contactless payment enabled. Apple Pay is also able to make purchases through apps in the App Store.
When the customers add a credit or debit card with Apple Pay, the actual card numbers are neither stored on the device nor on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on the customer’s iPhone or Apple Watch.
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By GlobalDataEach transaction is authorized with a one-time unique number using the user’s Device Account Number and instead of using the security code from the back of the card.
Eddy Cue, Apple’s senior vice president of internet software and services, said: "Security and privacy is at the core of Apple Pay. When you’re using Apple Pay in a store, restaurant or other merchant, cashiers will no longer see your name, credit card number or security code, helping to reduce the potential for fraud.
"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."
