When I go for a long walk, I like to explore new routes which inevitably leads to discovering new coffee shops just begging me to try everything they offer. This is probably my favorite part of a walk, unless I forget to stick my credit card in my pocket before I leave my apartment. But guess what I never forget? My phone. Now with Apple Pay, I have a solution to this problem. All I need is my phone and I can purchase every coffee and pastry my heart could desire.
Launched in October, there are positives and negative attributes of Apple Pay, and it is too soon to know the impact of this new Apple offering. Instead, I think it is worth a quick update on how retailers and individuals are adapting, integrating, and thinking about security issues with Apple Pay.
On the retail side, what started off as a small list of brick and mortar stores able to accept Apple Pay has grown significantly just in the last month. This list will no doubt continue to grow at a fast rate. A focus for retailers right now is to make sure that their point of sale software is compatible with Apple Pay. Software companies have leapt at this opportunity and many are offering to integrate a current POS to ensure compatibility.
There is a reason retailers want to integrate Apple Pay into their POS system – decreased risk and liability. When a customer makes a purchase with Apple Pay, the merchant never receives the actual card number being used. Instead, the merchant receives a DAN (Device Account Number) that is combined with a one-time transaction ID. What does this mean? Fewer Target-style breaches because there is no incentive to steal a DAN and less negative publicity for retailers dealing with a large-scale breach.
For the individual, these security precautions are even more important. As someone who has had to go through the painful and tedious process of closing down accounts, opening new cards, and updating every automatic payment account, Apple Pay seems like a god send. But not so fast. Retailers may be able to breathe a sigh of relief knowing that they are less likely to face breaches, but not so for the individual. Some believe that thieves will now just turn to the next weakest link in the financial transaction chain: the mobile devices themselves. This means that security concerns will remain a problem at the individual level. In addition to the security concerns, a limitation and/or deterrent to using Apple Pay is that an individual must have the iPhone 6, iPhone 6 Plus, or wait until Apple Watch is released in the spring.
With all the reasons to or reasons not to use Apple Pay as individuals or retailers, I expect it to be a normal part of our lives shortly. This brings me back to my opening thought: less to remember when I leave my apartment. I believe many people like the idea of only having one or two items they need to carry around on a daily basis. Now just let me “carry” my driver’s license in my phone and I would be set.