That may be part of it, but the low-hanging fruit is online purchases. Which makes me think this isn’t about point-of-sale terminals in physical stores. So it has to be more convenient than a credit card. It’s taken for granted that there will be a certain fraction of false positives and negatives.Īnd this is as much about usability as security: Apple wants people to reach for their iPhones rather than their credit cards, so Apple can get a cut of the transactions. That is, they spend far more on predicting whether you would make that purchase than on whether it was you holding the card. Ever since the beginning of online purchases, American credit cards have emphasized fraud detection rather than authentication. Keep in mind that security is a trade-off with convenience. So no new NFC hardware, just low-power Bluetooth. My guess is that whatever they announce, it will work for the existing iPhone 5S user base. I’m wondering if that will be used in some interesting way. The iPhone 5S, with its fingerprint scanner, uses a secure enclave– processor and flash memory– to store fingerprint data. Add an online payment function to this and you have a potential game-changer in several ways.
I am not sure how Apple would make money in this though apart from making phones more attractive, but allowing a card issuer to issue a virtual credit card on iPhones surely will have its price.Īll in all, if true quite a deal if they really did this. This will allow the participating banks to 1) issue “virtual cards” to iPhone owners and 2) allow merchants to process iPhones like “card present” which means lower transaction fees = lower risk (but also lower income to acquirers, but that’s due to lower risk). Apple is not a bank either, so what they may have achieved with the card networks is to recognise to have “iPhone token” the equivalent as “card present” in the operational rules. They aren’t banks either – they are associations with banks as members who then issue cards and acquire transactions at merchants. The author of the referenced article knows little about card payments.
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