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The pieces are quickly falling into place for Apple's mobile payments system

It looks as though Apple has signed up the “big three” when it comes to payment processors for its new mobile payments system.  Jason Del Rey of Re/code earlier today reported that Apple has signed up American Express, while a follow-up report from Bloomberg said that Apple also managed to snag both Visa and MasterCard.
However, signing agreements with American Express, Visa, and MasterCard is just one piece of the puzzle when it comes to making Apple’s mobile payments system a success. Apple will also have to convince retailers to invest in upgrades to their point-of-sales (POS) systems to support Near Field Communications (NFC) technology — if they haven’t already done so.

NFC capabilities have long been included in Android devices, but Apple is looking to bring its own spin on the technology with its upcoming iPhone 6. Wired reported last week that an Apple-branded payment system would be announced at the September 9 keynote address, and would make use of not only Touch ID and a hardware NFC chip, but also a security chip to store payment data.
John Gruber seemingly confirmed that information, responding in jest to a report from John Paczkowski of Re/code, “I’ve been working on a new joke — about NFC and a new secure enclave where you can store your credit cards, so you can pay for things at brick and mortar retail stores just by taking out your iPhone, but only if it’s one of the new iPhones.”

The iPhone 6's hardware NFC chip
In a series of leaks late last week, it was revealed that NXP will manufacturer the NFC chip found in the iPhone 6.

Sources: Re/code, Bloomberg

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By Dr. Kenneth Noisewater on 9/1/2014 10:59:23 AM , Rating: 3
Google Wallet + Nexus 5 already does NFC payments just fine in a number of places, I've always had successful transactions at Whole Foods.

It would be nice, however, to be able to assign purchases to particular cards in such a way as to maximize cashback. For example, my Amex gets 3% back for gas, but only 1% back for most other things, while my Visa gets 1.5% back for everything. I default my Google Wallet to the Visa, though it'd be nice to be able to assign gas purchases to the Amex.

Anyway, which wireless charging standard will iPhone 6 support? The one to go with is Qi, so I bet they'll either come up with their own proprietary shit or continue to lag years behind the industry and not have it.

RE: Google Wallet + Nexus 5 = already did it
By tonyswash on 9/1/2014 2:04:32 PM , Rating: 2
Google Wallet + Nexus 5 = already did it

Except it's barely used in the real world.

By tng on 9/2/2014 4:46:08 PM , Rating: 2
Except it's barely used in the real world.
Is this the same system they use in Japan?

After being over there this last week, I noticed that all of the vending machines would take a payment by phone. It seems that it is used very heavily there at least.

RE: Google Wallet + Nexus 5 = already did it
By ritualm on 9/1/2014 9:50:46 PM , Rating: 2
Google Wallet + Nexus 5 already does NFC payments just fine in a number of places

If only Google didn't hamstring Wallet to just a select elite few devices...

RE: Google Wallet + Nexus 5 = already did it
By amanojaku on 9/1/2014 11:06:02 PM , Rating: 2
There's that, although Google Wallet needed NFC's Secure Element to work. Many devices that had an NFC chip lacked the Secure Element, possibly due to price. The NFC chip costs $5 per device, which would translate into millions of dollars of increased build cost for product line. That's OK for flagship devices that generate significant revenue, but not for budget and mid-range devices.

However, NFC never took off because it simply wasn't ready as a payment system.

Nokia created it and had to revise it a few times because of inherent security issues like replay attacks. Most companies got around this buy adding additional security at the software level, but this didn't sit well with banks and they chose not to adopt NFC.

One of the biggest and first companies to process NFC was Bling Nation back in 2009. It was successful in its partnerships, but then it got greedy and tried to jack up its fees. Customers (merchants) bailed and took their business elsewhere, causing Bling to fail in 2011. Since Bling had the bulk of NFC partnerships and test pilots here in the US, its demise set NFC back quite a bit.

Then there was the issue of interoperability. Since the hardware standard was incomplete the processing companies created their own software platforms. Few were compatible with each other, making it harder for a merchant or bank to know which platform to support. Instead of everyone working together to make the "next big thing" a standard, they prevented each other from succeeding.

Mobile phone security was a consumer concern. At the time NFC was released few people trusted their mobile devices for payments. The only company that managed to pull off mobile payments is PayPal, most likely due to its existing user base. Apple Passport and Google Wallet combined account for less than 20% of mobile payments - PayPal has the rest.

Lastly, the merchants. In order to support NFC you have to upgrade your terminals. Which costs money. Starbucks could afford it. Fedex could afford it. The average merchant can't. Or doesn't want to because he/she doesn't understand risk management. A client lost his POS terminal because he refused to listen to me when I insisted it needed to be replaced due to age. $400 for a replacement is nothing. The bill I handed him for an emergency replacement was $1,900. I lost quite a bit of sleep rebuilding his inventory from scratch, and the Memorial Day weekend. He lost quite a bit of sales. No, he's not paying for backup, either, but I digress.

Loss of money is what is renewing the switch to NFC. In 2015 EMV (of which the most famous brand is "Chip and PIN") will shift credit card fraud liability to the weakest link in the payment security chain. If you're a merchant who tendered a sale without EMV but your card processor supports it, you will not get any money back if the purchase was fraudulent. The recent terminals that support EMV usually support NFC, so any merchant concerned about fraud will upgrade and gain NFC for "free".

This is why Apple is adding NFC now. It makes sense. When Google supported NFC it simply was not viable because few people could use it. Now people will, so Apple is moving ahead. Both moves are in keeping with each company's culture: Google will invest in almost anything just to see where it will go, Apple is only interested in things that are currently or most likely going to be popular.

By tonyswash on 9/2/2014 5:50:35 AM , Rating: 2
Both moves are in keeping with each company's culture: Google will invest in almost anything just to see where it will go, Apple is only interested in things that are currently or most likely going to be popular.

I am not sure 'popular' is the right word for what interests Apple, after all netbooks were popular for a while and cheap handsets are very popular right now, and neither interested Apple.

Alternatively the difference between the product cultures of the two companies could be characterised like this: Google is willing to release multiple semi complete products which evolve over time and which include many products that do not survive for long, and to foster a product culture that is decentralised and thus less integrated. Apple releases very few product, all of which are highly integrated (through the control of as many product components and inputs as possible), and only release products that meet it's own (quite high) standards in terms of design, build quality and above all user experience.

I would also add that Google is potentially interested in every product category because every product category potentially generates user data and Google aspires to acquire all the world's data about what everyone is doing because the more data it is has the greater the value of it's single money making product which is advertising.

Apple's approach to new product categories is different. Apple makes most of it's money from actual devices and will broaden the scope of it's service and service stack in order to add value to those devices (hence Healthkit, Homekit, etc) however Apple is very conservative about entering new device markets. Apple usually only does so very occasionally and only when it is confident that it can disrupt the incumbent product terrain (such as with mp3 players, handsets and tablets).

By w8gaming on 8/31/2014 10:35:43 PM , Rating: 1
So if I pay the retailers using Apple, do I pay Apple using bank credit card? How about then I turn around and pay the banks using Apple again and repeat? Can I owe money forever without actually settling any?

RE: hmmmm
By Brandon Hill on 8/31/2014 10:57:12 PM , Rating: 2
I'm assuming all of this will run through iTunes somehow. You have to have at least one credit card on file with iTunes (to purchase apps, music, books, etc).

You pull out your smartphone at the register; prompt comes up asking you which stored CC you want to use, swipe Touch ID to complete/authenticate purchase.

RE: hmmmm
By robinthakur on 9/1/2014 5:16:19 AM , Rating: 2
I'm not so sure. Here in the UK (and europe) we have had the facility in most metropolitan areas, shops, bars etc to pay contactless for years using NFC built into the cards.

I would imagine it will just be an enrollment option for your cards similar to Safari storing the card information in your Keychain, as happens currentlyk to be able to pay online easily. Currently, that is all done on the device, not through iTunes explicitly you then open the wallet app, select the card and hold it on the reader to pay, probably using Touch Id to authenticate. Hopefully Apple have learned from Google's experiences with Wallet and partnered more widely so that a critical mass of people can now use the system.

I didn't really expect Payment through NFC on mobile devices to start being widely accepted by banks and other instituations until Apple adopted it, so I'm glad that it can now start being used. Once again, whilst Android was theoretically first on this front, leave it to Apple to do it right in a way which has the confidence of big business.

RE: hmmmm
By tonyswash on 9/1/2014 8:45:53 AM , Rating: 2
I think this will be a conduit for existing credit and debit cards accounts, almost certainly the ones registered with iTunes (there are 800+ million iTune accounts most of which have credit cards registered). Apple have been working on this for a long time and have been registering patents related to an iWallet payment system continuously for several years.

I think Touch ID will be central to it as well as a probable new secure enclave on the new A8 cpu for credit card data.

I think it will also link to the wearables that Apple have been working on (such as a Touch ID broach or wrist band that you touch to make a payment all tied to bespoke retailer iBeacon discoverability systems).

I have posted this before but it's worth doing so again because of how perceptive it is, it's an article by Tim Bajarin about the Disney band ID system and what it can do.

I think Apple wants to be the supplier of such solutions to the corporate sector. I think Apple's ambitions in this area are very big and it has been assembling the pieces of this project (iTunes infrastructure, Touch ID, iBeacon, secure enclaves on the CPU, etc) for a long time.

RE: hmmmm
By torpor on 9/2/2014 9:32:26 AM , Rating: 2
Hopefully this will explain how various wallet phones will work. Apple's, certainly, but Google and others, too.

Anyone else wondering....
By Bill S. on 9/2/2014 10:34:56 AM , Rating: 2 secure Apple is making this? Especially after this weekend's celebrity photo leak? Not saying it's impossible for any other company/entity to suffer a similar experience, but it's got to make people nervous about Apple's app security right now.

RE: Anyone else wondering....
By tonyswash on 9/2/2014 1:11:06 PM , Rating: 2
quote: secure Apple is making this? Especially after this weekend's celebrity photo leak? Not saying it's impossible for any other company/entity to suffer a similar experience, but it's got to make people nervous about Apple's app security right now.

I think that it is likely that payment data (card numbers, PINs, passwords, purchase history) may well be given their own secure enclave on the new A8 chip in the same way that fingerprint data was given a secure enclave on the A7. Health data may also have it's own secure enclave. Building security components into the CPU itself is one of the things Apple can do as a result of designing their own CPUs.

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer

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