Apple Pay – Secure or Not Secure?

Apple plans to unleash the new Apple Pay in October 2014 with its much-anticipated iPhone 6 and iOS 8.1. Apple Pay claims to ‘change how you pay’ with its built-in fingerprint scanner and authentication microchip that allows customers to use their iPhones in place of their debit or credit cards for both online and in-store transactions. Apple’s release will rival Google’s mobile payment application, Wallet, that was released back in September 2011 for numerous devices.

Apple is pushing the idea that Apple Pay will enable American consumers (as for now, it’s exclusive to the U.S.) to quickly complete transactions using a single fingertip with the Touch ID screens technology first released with the iPhone 5S. Users do not even need to download any application to their iPhones as Apple Pay uses the Near Field Communication antenna embedded in the iPhone 6 to communicate with a merchant’s contactless reader. NFC

Although Apple Pay setup requires users to either add the card from their iTunes account, use the iSight camera to obtain a new card’s data, or enter card information manually, Apple is advertising that Apple Pay is more secure than using a real card during transactions.

Besides the Touch ID technology possessing a slim 1 in 50,000 chance of finding a random match to your unique fingerprint, like EMV technology, Apple Pay creates a unique number to each transaction. This unique number, which is called a Device Account Number, is encrypted and stored in a chip in the iPhone called the Secure Element. In theory, the Secure Element should never be cracked since it is in the iPhone itself and not stored on Apple servers. Essentially, Apple Pay should be more secure because card numbers are never shared with merchants.Apple Pay iPhone mobile application

Although customer card data should not be shared with merchants, Apple Pay’s privacy policy for the beta iOS 8.1 release exclusive to developers supposedly states that information about a customer’s payment card, including the number, name, and billing address associated with the account, could be sent to Apple in order to ensure legitimacy of the card. Although Apple states this potential distribution of sensitive customer data is ‘for fraud detection purposes’, it introduces questions about Apple Pay’s security.

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