What is Apple Pay? Here's everything you should know

Apple has announced its flagship smartphones for the year along with its own smartwatch. The key additions in its devices this time round is Apple Pay, which aims to kickstart the fledgling mobile wallet market with security improvements and by building an agile ecosystem, at least in the US. Other countries will have to wait in line to see if it can make an impact on how we make our payments.


Pay - Apple's wireless payments system, will work with the newly launched iPhone 6 and the iPhone 6 Plus. It will also work with its smartwatch called Apple Watch, so that iPhone 5, 5c and 5s users can also make payments by pairing their phones with the watch.


The Pay system is built upon three key elements: built-in NFC antenna, Touch ID and Secure Element.



The new phones and the Apple Watch are equipped with NFC for making payments in physical stores. The NFC chip inside the devices transmit payment information between the merchant, buyer and the bank, which is authenticated by a PIN. Although NFC has been on smartphones for a while now, their use has been pretty limited. While some retailers have also started to accept NFC payments, it hasn't really caught on. Can Apple Pay change that? It might be successful in the US, where it has partnered with some major merchants and retail chains including Subway, McDonald's and Whole Foods, who will bring Apple Pay to their physical store locations. However, it might be harder to build a similar ecosystem in a country like India where a majority transactions happen via independent shopkeepers.



Touch ID, or the fingerprint scanner on the home button verifies details with your fingerprint when making online payments. This means, once you've saved information for a particular fingerprint, you won't have to type in shipping and billing information manually when making purchases on an e-commerce website. We saw this feature on the iPhone 5s, only Apple has extended its use to make purchases on other e-commerce websites than just the App Store. Uber cabs and Groupon are some of the e-commerce websites which will support touch payments


Secure Element

Taking a dig at Google, Apple said "We are not in the business of selling your information."  The so called 'Secure Element' claims to store payment details in an encrypted form so no one other than you and your bank can know your payment details. In fact, even the cashier does not get to see the card details. Apple claims that it won't store actual card numbers on the device or on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and stored in the Secure Element on the iPhone or Apple Watch.


Users who already have their card details saved on their iTunes account won't need to add them again for transactions via Apple Pay. Others, will have to use the phone's camera to snap a picture of their credit or debit cards and verify it with their bank before it gets added to Passbook. Thereafter, users can use Apple Pay for making payments online and at physical stores.


Pay will accept credit and debit cards from American Express, MasterCard and Visa. Apple has added Pay services to 220,000 merchant locations in the US including - Walgreens, DuaneReade, Marcy's, Subway and McDonald's to name a few. Disney is expected to have all of its retail locations outfitted with Apple Pay by Christmas.


Apple Pay will made available to iPhone 6, 6 Plus and the Apple Watch with the iOS 8 update in October. Apple has announced this only for US as of now, so it might be a while before users in other countries can make purchases via Pay.

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