Introducing Apple Pay: A Look at Usability, Competition, and Security

Credit and debit cards could soon take a backseat to the newest and hottest form of payment to date: the mobile wallet. In October 2014, Apple cornered the mobile wallet market by introducing Apple Pay, a new app that experts predict will be a huge hit.

Born of Near Field Communication (NFC) technology, Apple Pay lets iPhone and iPad owners use their devices to pay for items in-store. Let’s say that you visit your local supermarket, pick up a bunch of bananas, and tap your iDevice to the scanner in the check-out lane. The two devices “communicate” with each other via magnetic field induction. The topic of their discussion, of course, is your banana transaction.

Indeed, Apple Pay is a shiny new option for owners of iOS 8.1 or later. How do you use Apple Pay, and how does it rate in terms of convenience and security?

How to Use Apple Pay: What You Need to Know

Apple Pay is a snap to set up. Simply open the Passbook on your iOS device, and add your debit or credit card information. Most major banks participate with Apple Pay, but if you’re not sure whether your bank is compatible, simply check the Apple website to find out. If you already have a card on file with iTunes, you can easily select that as your default card for Apple Pay.

When the time comes to pay for your goods, simply hold your device near the POS terminal. The credit/debit information that you’ve pre-programmed into your phone will automatically appear on your screen. With the swipe of your thumbprint, you give your approval, bag your goods, and continue on your way.

The biggest problem that you might encounter is not Apple Pay itself, but all the confused clerks who don’t know about the app yet. Apple Pay just launched, and plenty of cashiers aren’t familiar with it. Granted, Apple Pay isn’t complicated to understand, but there will be a learning curve.

Apple Pay Convenience vs. Your Security

Without question, Apple Pay is a convenient way for iOS users to pay for merchandise. No longer will you need to dig through your purse or wallet for your card. If you left your card at home, no sweat. Your iDevice’s pre-stored information is all you need.

But is Apple Pay secure? On the plus side, Apple Pay assigns a string of unique-yet-random data to each transaction so that cashiers, computer systems, and other prying eyes never see your credit card data. The string of random data, called a “token,” expires after the transaction completes and cannot be used again. This secret-code security feature is called “tokenization,” and it’s a concept that 22 of the world’s largest banks endorse as a way to protect themselves against theft and fraud.

Tokenization makes Apple Pay more secure than any credit card, including magnetic-strip cards and the more advanced chip-and-PIN cards. But if you lose your phone, could a stranger make off with all your money? Apple offers an app for that worrisome situation. It’s called Find My iPhone, and it helps you find your missing device on a map and lock it remotely so strangers can’t make purchases with your money.

Granted, the Find My iPhone app is a nice safety net. But according to anecdotal evidence from Apple’s support forums, some iDevice owners have had their phones/tablets held for “ransom” by unsavory characters who hacked the owners’ usernames/passwords and logged into their iCloud accounts. If this happens to you, change your Apple password ASAP, and consult the Apple support website for further instructions.

Checking Out the Competition

Apple Pay isn’t the only contender in the world of mobile wallets. Here’s a peek at Apple Pay’s major competitors and what you can expect from each of them:

• PayPal Mobile: Works for Android and iPhone, but only at PayPal-enabled terminals. Uses wireless technology instead of NFC to communicate. Users don’t enter credit/debit card information; instead, they link their device to a PayPal account.

• Google Wallet: The oldest mobile wallet, this NFC-enabled technology holds multiple credit card and gift card account numbers at once. Requires the entry of a PIN number at checkout. Both iPhone and Android owners can use this technology.

• LoopWallet: App holders can pay with credit, gift, and loyalty cards by scanning a key fob or charge case at the sale terminal. Works for Android 4.2 and above and iOS 7 and above. Available at 90 percent of all POS terminals, LoopWallet was the most accessible mobile wallet as of September 2014.

Each mobile wallet has its advantages, but experts predict that Apple Pay will ultimately trump them all. The security measures offered by Apple are incomparable to anything else on the market, and the Apple name is trusted perhaps even more than Google. Furthermore, more than 800 million people hold iTunes accounts, which means their credit card information is already plugged in and ready to be used.

Security Tips for Mobile Payment Methods

We know that digital wallets are safer than plastic, but that doesn’t mean that it’s okay to be careless once you get one. Adhere to the following tips:

• Use a credit card rather than a debit card with your mobile wallet. If something goes wrong, your credit card company will absorb the cost. This may not always be the case with smaller banks that issue debit cards.
• Add as few cards as possible to your mobile wallet. That way, if something goes wrong, you have fewer avenues to pursue to correct the problem.
• Monitor your purchases. You can view your most recent Apple Pay transactions in the Apple Pay Transaction folder. Keep in mind that this data won’t be stored anywhere else.
• Use Apple Pay’s Touch ID with dry fingers. The biometric fingerprint scan typically won’t work if your fingers are wet.

Apple Pay is still in beta mode, and we don’t know yet how successful it will be. The good news is that it’s a more secure form of payment than anything that we’ve seen. The bad news: Nothing’s perfect. You still have to take measures to protect yourself, and security risks exist.