CUPERTINO, Calif. (9/10/14)--On Tuesday, Apple announced Apple Pay, a system that will combine near-field communication with its Passbook app, taking plastic cards out of the point-of-sale environment.
Apple Pay allows consumers to add their card on file for their iTunes account or upload their credit cards to their Apple Passbook by taking a photo of the card, said Apple vice president Eddy Cue (Payments Source Sept. 9). Apple confirms through the issuing bank that the card belongs to the consumer.
Apple Pay supports credit and debit cards from the three major payment networks--American Express, MasterCard and Visa--that are issued by banks such as Bank of America, Capital One Bank, Chase, Citi and Wells Fargo, which represent 83% of credit card purchase volume in the United States, Apple said.
The Credit Union National Association continues to work with the payment networks and others on the latest payments developments, including providing more information for credit unions interested in Apple Pay.
To become part of Apple Pay, credit unions and other financial institutions will need to enable tokenization with their payment networks.
"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," Cue said during the product announcement. Point-of-sale transactions are authorized with a one-time unique number and Apple's Touch ID fingerprint technology.
Apple Pay will work with the new iPhone 6, iPhone 6 Plus and the newly announced Apple Watch.
"The question for Apple is if they can take the complexity out of paying with a smartphone, to make it as easy as using a credit card is today," said Kevin Talbot, managing partner with Relay Ventures (The Wall Street Journal Sept. 9).