# The SBHonline Community Daily > Digerati Discussions! >  >  Apple Pay Rolls Out, With Holes in System - Will Mike and Ron take it at their shops?

## JEK

TECHNOLOGY
*Apple Pay Rolls Out, With Holes in System**IPhone Payment System Arrives Monday; Ubiquitous Use Isnt Assured Immediately*ENLARGE
Apple Pay will be accepted at 220,000 stores or inside apps using an iPhone._ASSOCIATED PRESS_



By DAISUKE WAKABAYASHI and 
GREG BENSINGER

Updated Oct. 20, 2014 12:31 a.m. ET32 COMMENTS

Starting Monday, Apple Inc. will begin its bold undertaking to add a wallet to its iPhones.
The iPhone already has pushed aside many once-independent devices, including music players, cameras and GPS navigation systems. Now, Apples new payment service will enable shoppers to buy items at more than 220,000 stores or inside apps using an iPhone and thumbprint.
Participants in the Apple Pay service include McDonalds , Whole Foods and Walgreen. Yet it wont be ubiquitous overnight.
Many retailersincluding the nations largest, Wal-Mart Stores Inc. arent part of Apples network. Only a minority have machines capable of reading the near-field communication radio signal that makes Apple Pay work. And only Apples newest phones, the iPhone 6 and iPhone 6 Plus, include the technology.
Apple has signed up the six biggest card issuers, accounting for roughly 83% of credit-card transactions, with 500 financial institutions coming by early next year. It also has the three major credit-card networks: Visa Inc., MasterCard Inc. and American Express Co.
Apple Pay is the technology industrys most ambitious effort to position smartphones as a safer and easier alternative to cash, checks and plastic credit cards. 
*MORE ON APPLE*What to Look for When Apple Reports EarningsWhy Apple Pay Faces Lighter Compliance Than Paypal, GoogleFirst Impressions of the iPad Air 2: Its Refreshed but Not Reinvented


Still, corporate credit cards or prepaid cards arent accepted yet. Neither are retailers proprietary credit cards, so shoppers cant use their Macys or Bloomingdales cards. That means customers might miss out on discounts tied to the store cards, while merchants relinquish revenue they receive from issuing banks.
Macys spokesman Jim Sluzewski said he expects the Macys branded card to be added eventually. He said roughly half of Macys sales come from its proprietary card, which is also linked to its loyalty program.
Store-branded cards are the big gaping hole in Apple Pay, said Richard Crone, founder of Crone Consulting, a payments advisory firm, who estimates that merchants collect as much as 4% of each transaction with their proprietary cards.
Apple expects to resolve these issues over time. Many merchants are likely to upgrade their payment terminals in the next year to accept cards embedded with a chip, to avoid liability under new antifraud rules. More of the new terminals will be able to read near-field communications. 
Were trying to do something that I think is a game changer and it requires a lot of people to play together, said Eddy Cue , Apples senior vice president in charge of Internet software and services, in an interview. Theres a lot to do here and we have a lot of work to do, but it should be huge.


Apple Pay requires a consumer to register a credit cardeither by taking a photo of a card or authorizing one already stored on Apples iTunes. Then, the shopper can make purchases by placing a finger over the Touch ID reader.
Apple Pay works with the latest iPads for in-app purchases, but the tablets cant be used for payment in brick-and-mortar stores. Apples smartwatch will be equipped with near-field-communications chips when it arrives next year, potentially expanding the pool of Apple Pay users.
An important selling point for Apple Pay will be security, after high-profile data breaches at retailers including Target and Home Depot. Apple Pay encrypts each transaction with a distinctive code that can only be used once, a security feature that protects consumers personal information from being stolen as it is transmitted through a retailers network, or from the retailers central database.
Banks pay Apple a small percentage from each transaction, but there are no additional costs to users and merchants for using Apple Pay. Piper Jaffray analyst Gene Munster estimates that Apple Pay will generate revenue of $118 million in 2015 and $310 million in 2016less than 1% of Apples estimated revenue of $180 billion in the fiscal year ended Sept. 27. The service also could boost demand for Apple devices.
ENLARGE
Apple executive Eddy Cue calls the Apple Pay system a game changer._ASSOCIATED PRESS_


Mr. Cue said he expects the biggest share of early Apple Pay transactions to be in-app purchases. Until now, spending money on an app required a time-consuming process of creating an account and registering a credit card, but Apple Pay aims to simplify the process with the equivalent of Amazon.com Inc.s one-step checkout that can be verified by a fingerprint.
Other attempts at mobile payments havent been widely adopted. In 2011, Google Inc. introduced Google Wallet, a payment service included in many smartphones running its Android operating system, but that initiative has failed to gain much traction.
Some big chains including Best Buy Co. and Wal-Mart are backing a retailer-owned mobile-technology group called Merchant Customer Exchange, which will employ software that can be used on both iPhones and Android phones. The service is still in pilot mode and wont roll out nationally until next year.
We believe that Apple Pay will accelerate mobile payment adoption, although it will likely take some time, Morgan Stanley analysts wrote in a report to clients earlier this month.
Robin Sidel and Suzanne Kapner contributed to this article.

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## stbartshopper

Our thought is unless the competition can come up with the type of security Apple Pay is offering in a hurry the world will use Apple Pay. Yes there will be glitches as there always are but they will be worked out. I still haven't see if the IOS 8 problems have been resolved yet? I would think reinsurers will say to Walmart and others that if they don't take action to shore up their security breaches such as switching to Apple Pay, they will no longer reinsure. Customers want to know they are protected- who wants to shop where the personal data is readily stolen? I am sure Amazon and Pay Pal are lurking but maybe they have been caught napping? We will see!

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## JEK

Apple didn't invent tokenization -- some banks and POS devices are doing it today. They clearly didn't implement NFC first as most Android devices have NFC. What I think they did is timed this launch when most merchants are faced with changing out POS devices for the chip & pin liability switch next year.  And all those stored cards on iTunes that will magically appear in the Apple Pay app.

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## JEK

Still waiting for our retails experts to opine on contactless terminals and Apple Pay. I used it today at a Walgreens and Whole Foods.

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## Petri

None the technology in Apple Pay is new.

The marvel about Apple Pay is the full package (and the hype doesn't hurt either).  For the US there's the additional benefit that you can move from your prehistoric magnetic stripe cards straight to contactless paying without actually getting chip- or contactless-cards from your local bank first.  One day your credit card from the bank may arrive straight to your phone and you'll never get a plastic.

The other aspect of the Apple Pay is of course that it's not all about paying at the physical store but you can use the same payment methods online as well.

My personal problem is that I don't consider iPhone state of the art and buying something that isn't state of art is soooo hard :-)

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## JEK

I used it in two different stores ysterday. Present the locked phone to the terminal and the request to use the Touch ID appears.

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## Petri

Apple Pay works for all sizes of payments?

The ordinary PayPass/PayWave limits are something annoying, here it's just $30 so it's hard to use it even for groceries.  In Australia it's 90$ (100 AUD) so it's quite fine for little shopping but not for your restaurant bill.

I can change in online bank all the limits for my ordinary credit cards so it's stupid that I cannot control the contactless payments.  It's set at the store so my contactless card from Finland works with Australian limits while there.

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## JEK

You can buy a car with it if the dealer takes it. Limit is based on the card limit.

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## JEK

USAA started supporting Apple Pay



Use Apple Pay for Security and Convenience

View Accounts | Privacy Promise | Contact Us





























Dear JEK, 

We're pleased to let you know that your USAA MasterCard ® credit card ending in nnnn has been enrolled in Apple Pay as you requested. 

*Apple Pay Means Added Security*
Apple Pay will give you added security when you make purchases. Here's how: 


Apple's Passbook app created your unique device account number. This number is on your bank card info screen in Passbook - tap ​i-to see it. 


Apple Pay will use this number - _instead of your USAA credit card number_ - when you make purchases. 


As a result, your USAA credit card number *will not* be passed to a merchant. Your purchase receipts will only show the last four digits of your device account number, not your credit card number. 


1


*Enjoy Apple Pay Convenience*
Along with added security, Apple Pay also makes shopping more convenient. In-app purchases are easy, and for in-store purchases, you'll simply tap your phone! Also, you'll continue to get your bank card benefits when you use Apple Pay. Learn more about Apple Pay and where you can use it. 

_If you didn't enroll in Apple Pay, please call us at 1-800-945-3689._

As always, we appreciate the opportunity to serve your financial needs and to protect the security of your personal information. 

Thank you, 
USAA Federal Savings Bank

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## JEK

*Apple Pay dominates discussion at Money20/20 mobile payments industry conference*By Neil Hughes
This week was the Money20/20 mobile payment conference in Las Vegas, Nev., and with over 7,000 people in attendance, the hottest topic at the show was the recent launch of Apple Pay and what it means for the industry.




J.P. Morgan analyst Tien-tsin Huang was in attendance at Money20/20, and provided a summary of the event in a note to investors on Thursday, a copy of which was provided to _AppleInsider_. At the conference, attendees were abuzz about Apple Pay, the recently launched mobile payment service from Apple available on the iPhone 6 and iPhone 6 Plus.

In particular, industry insiders view how Apple partnered closely with existing banks and credit card providers as a model for others to follow. Payment industry insiders view Apple Pay as a true "disruptor" that could have long-term ramifications for near-field communication-based payment terminals, and transactions in general.

Huang learned that Apple will bill and audit participating card issuers via the card networks, which serves to show how integral Visa and MasterCard are in the Apple Pay system.

Visa made it a point to highlight Apple Pay in a presentation by company vice president Ryan McInerney, who said that Apple's system is helping to reinvent the credit card number to work in the digital world. Specifically, he said the tokenization standard being pushed by Apple Pay will enhance security and improve transactions.

American Express Chief Executive Ken Chenault also said his company is excited about Apple Pay, noting that AmEx aims to be where its customers want to be, and consumers are excited about Apple's mobile payment service.

One card issuer that doesn't yet support Apple Pay is Discover, and its CEO David Nelms is taking a more cautious approach, saying at Money20/20 that adoption of Apple's service will take time. Nelms doesn't see a "world without plastic" traditional credit cards for at least a decade.

Using Apple Pay in-store on an iPhone 6 is quick, convenient, and dead simple from AppleInsider on Vimeo.


Overall, the industry has shown a "nervous enthusiasm" for Apple Pay, according to Huang. He said insiders believe Apple has the best opportunity to drive mobile payment adoption given its history of focusing on consumer experience, as well as its willingness to collaborate with banks and card providers.

"However, we heard healthy debate on how steep the adoption curve will be in the physical world (many were more bullish on Apple Pay's prospects for in-app purchases), given low merchant acceptance, and how bank friendly future iterations of Apple Pay might be as it gains scale," Huang said.

Still, payment industry members expect NFC chips will begin to spread more quickly with the upcoming switch to secure EMV cards in the U.S. The so-called "chip-and-signature" switch will be accompanied by new terminals at merchants, and payment industry experts expect that many merchants will opt for NFC-capable terminals when they upgrade.

"Many are watching how consumers embrace Apple Pay with limited merchant acceptance, understanding that merchant adoption of NFC will require consumers to demand it," Huang said.

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## KevinS

Another viewpoint:

http://money.cnn.com/2014/11/03/tech...d=HP_Highlight

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## JEK

Yep. Current C is an ACH withdrawal -- no fees. Really clunky implementation -- scan the QR of the purchase.

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## JEK

Still waiting to see what Mike and Ron think about Apple Pay and the chip and pin rollout next year.

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## Dennis

Honestly, it's basically you, Kevin and Petri in here.

I'm only here looking for people to ban and s*%t.

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## JEK

Andy drops in from time to time.

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## Dennis

Whatever.

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## Petri

One of us needs to turn into Microsoft fanboy.  Any volunteers?

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