With the announcement of iPhone 6 comes a unique way of paying for products using a combination of the NFC antenna and Touch ID. Apple accelerated the popularity of portable MP3 players with the introduction of iPod and in a similar fashion it appears as though Apple is well positioned to bring “contactless payment” into the mainstream. Due in part because of how the majority of iTunes accounts already contain a form of payment, it can be easily added as the default payment method in PassBook for owners of iPhone 6 or the Apple Watch beginning in early 2015.
Apple is actually fairly late to the game when it comes to this method of payment. Competitors like Google Wallet and PayPay already have a presence in this space but not without opposition from carriers who have been in favor of their own solution.
A cause of concern up until now has been the cost for merchants to update their card readers to accept NFC based payment technology. The timing of the Apple Pay announcement comes only a year before the new EMV requirements on card readers goes into effect in October 2015. It seems likely that merchants will choose to upgrade their readers to support both EMV and the NFC contactless payment method used in Apple Pay.
When you are authorized via Touch ID, a payment token is generated from the Secure Element inside your phone via the PassKit Framework that is used to complete the transaction by the payment processor. With Touch ID, your credit card and forms of identification never exchange hands.
When a credit card is added to PassBook, a device specific account number is stored in place of the credit card number in the secure element. If you were to misplace your phone, you can suspend payments from that device from the Find My iPhone web interface.
Of course for us developers there is a way of building Apple Pay into our iOS apps. The PassKit framework provides API’s for creating a payment token as well as presenting the payment sheet that contains shipping / billing info and shipping method.
The PassKit Framework Reference has details on the classes necessary to accept Apple Pay in your app.
Apple is adamant about how they are not in the business of collecting your information. They are simply providing us with a simplified purchase experience. Apple Pay will be available starting in October when 220,000+ stores across the US begin accepting it as payment.