Apple Pay: Scammers and Rival Competition

Monday 2nd, Mar 2015

Last year, Apple launched Apple Pay, their flagship mobile payment system in the United States, which is a system that offers consumers an easy and secure way to pay using their Apple device. In order to take advantage of this feature, you need to have a compatible device, namely the iPhone 6 or the iPhone 6 Plus, and the right iOS version. These two devices are the only devices enabled to handle in-store purchases as they are currently the only Apple devices equipped with the required NFC radio antennae. However, for in-app purchases, consumers that own the iPhone 6, iPhone 6 Plus, iPad Air 2, and iPad mini 3 will be able to employ this feature through the Touch ID sensor. Since the launch of Apple Pay, there have been huge surges in the number of retailers that accept payments through Apple Pay. In addition to the Apple Store, consumers can use Apple Pay at various US retailers including American Eagle Outfitters, The Disney Store, Nike, among others. Furthermore, what makes Apple Pay such a game changer is that in addition to the retail market, it has also launched on airline carrier, JetBlue, where consumers can use Apple Pay for snacks, drinks, and even seat upgrades. The success of Apple Pay is really no surprise after Tim Cook named 2015 as "the year of Apple Pay".

JP Morgan Chase recently stated that more than a million customers have added their credit and debit cards to this service provide by Apple. However, despite its vast success, Apple Pay is not without problems. Recent reports have suggested that Apple's flagship mobile payment system has been abused by criminals looking to fraudulently obtain high-value Apple products. Criminals are setting up new iPhones with stolen personal information and then get banks to set up the victim's credit card onto the new phone which in turn can then be used for purchases. Although these criminals have not breached the "secure encryption around Apple Pay's fingerprint-activated wireless payment mechanism", this development is still extremely troubling.

The news of Apple Pay being used by scammers has emerged along with the recently launched Samsung Pay, a similar payment mechanism that allows consumers to pay for goods and services by waving their smartphone near a register. Similar to Apple Pay, Samsung Pay uses NFC but with an added piece of technology known as the Magnetic Secure Transmission, that allows the system to be used with any register that can accept a credit card. This was made possible by Samsung's acquisition of LoopPay last month. Unlike Apple, that has ignored point-of-sale systems that have magstripe readers, Samsung Pay will tap into this market and most retailers will simply have to accept payment through the Samsung Galaxy S6 making Samsung Pay accessible to more retailers.

Nevertheless, although it is yet to be confirmed, there have been indications that Apple Pay might be ready to launch very soon in Europe with Visa Europe introducing new tokenisation tech and the new system having a roll-out timeframe of mid-April.