Apple Pay
Apple Pay is a mobile payment service by Apple Inc. that allows users to make payments in person, in iOS apps, and on the web. It is supported on iPhone, Apple Watch, iPad, Mac, and Vision Pro. It digitizes and can replace a credit or debit card chip and PIN transaction at a contactless-capable point-of-sale terminal. It does not require Apple Pay–specific contactless payment terminals; it can work with any merchant that accepts contactless payments.[1] It adds two-factor authentication via Touch ID, Face ID, Optic ID, PIN, or passcode. Devices wirelessly communicate with point of sale systems using near field communication (NFC), with an embedded secure element (eSE) to securely store payment data and perform cryptographic functions, and Apple's Touch ID and Face ID for biometric authentication.
Developer(s)
October 20, 2014
iOS 8.1 or later
(iOS 10 or later for Apple Pay on the web)
(iOS 11.2 or later for Apple Cash)
All watchOS versions
macOS Sierra or later
All visionOS versions
- In store:
iPhone 6 or newer
Apple Watch paired with an iPhone, or Series 3 or newer with cellular - On the web (Safari):
iPhone 6 or newer with iOS 10 or later
2014 iPads (Air 2, Mini 3) or newer with iOS 10 or later
2016 MacBook Pro with Touch ID or newer
2018 MacBook Air or newer
Macs based on Apple silicon paired with a Magic Keyboard with Touch ID
Macs supporting Handoff running macOS Sierra or later paired with an Apple Watch or iPhone 6 or newer
Apple Vision Pro - On the web (3rd party browser using WebKit):
iPhone 8 or newer with iOS 16 or later
Apple Pay can also be used to ride some public transport networks[2] either through the use of credit/debit cards (open loop) (for example across TfL in London, SL in Stockholm, and at OMNY readers across New York City's subway and bus network) or dedicated travel cards such as JR East's Suica, the Chicago Transit Authority's Ventra, the San Francisco Bay Area's Clipper (closed loop) and Hong Kong's Octopus Card.
Service[edit]
Device compatibility[edit]
The service is compatible with iPhone 6 and newer, iPad Air 2 and newer, Macs with Touch ID, and Apple Watch Series 1 and later. In iOS 17 or later, the number of cards able to be added to the service is determined by the capacity of the secure element, which varies by device.
Cost[edit]
Apple Pay does not cause additional fees for users and merchants. In Switzerland, for example, participating card issuers pay for the service. In 2020, Swiss banks paid a fixed commission 0.275 CHF (US$0.26) quarterly on every card to Apple. Additionally, they paid 0.12% for credit card transactions, and 0.17% for web or app based transactions. Swiss antitrust authorities require that an acquirer pays maximum 0.44% of the transaction amount to the issuer. The competition commission calls this amount "interchange fee". Apple charges between 27% and 39% of the credit card issuers' income earned from the acquirer.[20][21][22][23][24]
History[edit]
The service was in preparation for "a long time", as Apple acquired startups, hired executives and filed patents related to payments.[5] Apple partnered with American Express, Mastercard and Visa. Their joint project began in January 2013, though they had discussed Apple's potential involvement for years. Their joint solution was a system where single-use digital tokens would replace the transfer of personal information.[11] A Visa executive said that 750 people at the company worked on the anonymized "token" system for a year, and the other partners had similar teams in collaboration.[25] Mastercard began work on the project in 2013 and hoped that their joint work would become a "standard for mobile payments".[25] The announcement of the service came at a time when Mastercard and Visa policy created strong incentives for upgrading to mobile payment-compatible point of sale systems.[5] Apple then approached several big banks in mid-2013 and did not divulge the names of the other banks. To maintain secrecy, JPMorgan set up a windowless "war room" where the majority of the sensitive work was done. Of their 300 people on the project, about 100 knew that the partner was Apple. Others close to the project did not know it was named "Apple Pay" until the announcement. The company's participation remained a secret leading up to its announcement.[11]
The service was announced at Apple's iPhone 6 event on September 9, 2014. At its announcement, Apple CEO Tim Cook described the magnetic stripe card payment process as broken for its reliance on plastic cards' "outdated and vulnerable magnetic interface", "exposed numbers", and insecure "security codes".[5] The iOS 8.1 software update accompanying the service's launch activated Apple Pay on compatible devices.[5][7][26] The company announced an API for app developers to build Apple Pay checkout into their apps.[5]
The service initially supported US-issued payment cards. An international roll-out was ongoing, beginning with support for UK-issued payment cards in July 2015.[27] On December 17, 2015, Apple announced that it would launch Apple Pay with fifteen major banks in China,[28] and Chinese users could start to use Apple Pay on February 18, 2016.[29]
In October 2015, Apple Pay vice president Jennifer Bailey confirmed that KFC, Chili's, and Starbucks would begin accepting Apple Pay in 2016.[30]
Bank of America is outfitting some of its ATMs with Apple Pay support and the ability to withdraw cash using it. The new Apple Pay enabled ATM is outfitted with the NFC reader and logo that Apple Pay users have become used to seeing since the service launched. The NFC reader is located directly to the left of the card reader, although unlike the card reader, the NFC reader does not light up. Bank of America has launched a new website[31] detailing the simple process of withdrawing cash with a smartphone (Google Pay, Samsung Pay, or Apple Pay). Bank of America says that "Consumer Debit Cards, U.S. Trust Debit Cards, Small Business Debit Cards (owner card only)" are supported.[31][32] Wells Fargo and JPMorgan Chase also integrated Apple Pay support into their ATMs.[33]
On September 7, 2016, Apple announced that iPhone 7 and Apple Watch Series 2 users in Japan can add both local credit cards and FeliCa cards to their Apple Pay wallets. Only Suica cards are supported by Apple Pay, which can be used at subway stations, convenience stores, etc., just like regular Suica cards. Apple Pay also supports payment via all QUICPay and iD enabled terminals that are already popular in Japan.[34][35][36]
On March 25, 2019, Apple Card was announced in partnership with Goldman Sachs and Mastercard.[37]
In June 2020, it was announced that the European Commission (EC) will take two probes against Apple, one focused on Apple Pay. According to EC, Apple was abusing its control of its payment wallet by blocking third-party payment access to the NFC hardware that enabled contactless payments. Apple opposed the claim and cited the COVID-19 pandemic as a cause of the increased number of people using contactless paying.[38]
Reception[edit]
Reviews[edit]
Journalists noted the multiple previously unsuccessful efforts of other retailers to build mobile payments services,[5][25] including those of PayPal, Walmart, Target,[5] Google Wallet, and Softcard.[25] They noted that previous efforts did not solve customer inconvenience issues, and felt that Apple Pay potentially did.[5] The Verge's Adrianne Jeffries noted that mobile payment market fragmentation was partially due to Apple's refusal to enter the market. BusinessWeek's Joshua Brustein added that Apple has a history of letting "first movers fail" with an early version of the service before releasing "a more polished version of the same idea".[5] The Verge's Dieter Bohn called Apple Pay the "week's most revolutionary product" and the announcement "a classic Apple moment of simplification and integration", and the partnership between payments services and Apple "a rare piece of collaboration and agreement". He predicted that the service's effect on the mobile payments industry would be similar to the iPhone's effect on the smartphone industry.[25] Nathaniel Popper of The New York Times referred to the banks' level of coordination with Apple as "elaborate" and indicative of mutual "preparation and investment".[11] Some analysts added that the service could reduce the standard credit card transaction fees over time since fees traditionally cover credit card fraud. The banks were willing to work with Apple in the face of efforts like Bitcoin and the Merchant Customer Exchange, which seeks to work around the card networks.[11]
Early reviews of the service regarded it as easy to use, but were not sure whether the service would become widely adopted.[71][72] The Verge's Nilay Patel wrote that the product demo was "remarkably smooth" and "a cohesive user experience".[71] Patel said the process took five to ten seconds at a retail card reader and added that it may be less smooth at stores such as Walgreens, where cashiers prompt customers for loyalty cards and charity donations.[71] The New York Times' Neil Irwin wrote that Apple exaggerated the inconvenience of credit cards. Among the plastic card's benefits, he included how others could make purchases on another's behalf and how dead cell phones could leave the owner stranded.[72]
In a 2018 publication released by Consumer Reports, Apple Pay Cash was the leading peer-to-peer payment service.[73]
