While Apple is banking heavily on its Apple Pay service, it wasn't until this weekend that I had a chance to try it out. Here it is in a nutshell: Apple Pay is totally boring - and may change everything.
I would have tried Apple Pay sooner, but my bank didn't support it until recently. I've banked with this particular bank for a very long time. I stay with them because it would be too big of a pain to change banks, but they're not exactly consumer-friendly. In fact, I've often thought that their logo should be a giant corporate middle finger.
In any case, there it finally was. Apple Pay support was suddenly available. More banks are coming on board all the time.
Setting up my account in Apple Pay was very simple. You go to Settings>Wallet and Apple Pay on your phone. The app takes a picture of your card, and reads the information. As soon as you add the little three-digit code on the back, you're set up. Some users may have additional verification, but my setup was completed pretty much before I realized it.
I went to GameStop to try it out. I had an actual Saturday off without a pile of Monday morning project deadlines, and I wanted to play a video game on my PS4. The store had Dishonored 2 Limited Edition, which included the first Dishonored, a game I very much enjoyed a few years ago. I brought it up to the cashier. As is GameStop's way, the guy behind the counter found the game disk (yes, there are still disks for some things out there), put it in the box, and proceeded to ring me up.
Instead of handing him my card, I placed my phone over the credit card machine and pressed the Home button. That's it. All of a sudden, the transaction was rung up. I was surprised that I also had to sign to complete my transaction, but that was it. No hunting for my card, no providing proof of ID, nothing. Just move the phone, press Home, sign, and done.
I know, it sounds boring. It's certainly not hard, but it's also not that interesting. Why, then, do I predict Apple Pay (and its ilk) will change everything? What makes it special?
The answer to this question is what goes on behind the scenes. When you pay with Apple Pay, the merchant doesn't get your credit card number. Instead, the iPhone's NFC chip, along with Apple's secure enclave, creates a one-time-use token that's sent with the transaction.
The phone is tied to your identity, so your purchase intent is verified with Touch ID. Since the code only exists long enough to record the transaction, security of the transaction vastly exceeds that of traditional credit cards.
That is simply not possible if you pay with Apple Pay. As I said, because the identity information provided with the transaction exists only long enough to make the transaction go through, it becomes vastly harder for retail fraudsters to capture identifying information, use it to conduct identity theft, or make purchases on your card.
In discussions I've had with bank fraud inspectors, it's become clear that credit card fraud is off the charts. This is supported in Verizon's 2016 Data Breach Investigations Report [PDF], which showed that 32 percent of all retail breaches occurred at point of sale.
From the consumer perspective, replacing a credit card can take hours and hours of work. There's the long negotiation with the credit card company to get charges reversed. There are often forms to fill out, and you have to wait for a new card. If you use the card for any regular fee payments, all of those payees have to be notified, and provided with a new form of payment.
If Apple Pay can reduce or eliminate the incidence of retail fraud, it will be a huge win. It's not nearly as sexy as most of what we associate with Apple, but if we can save a few hours every few months, it could add up to enough time to actually play a video game on a Saturday afternoon.