Mikey Campbell
On Thursday, four banks offering support for Apple Pay commented on Apple's first foray into mobile payments, confirming that liability for fraudulent activity will ultimately fall on their shoulders for both online and physical transactions.
Ahead of Apple Pay's schedule launch later this month, The Daily Dot spoke with representatives from four major banks backing the payments service, including Chase, Navy Federal Credit Union, PNC and USAA. The firms lauded Apple's secure payment process, which incorporates Touch ID fingerprint identification, touchless NFC, Secure Element data storage and tokenized transaction processing.
"When Apple got in touch with us and showed us their solution, we were very excited to see what they had been working on and what they had developed, particularly since it was so convenient, secure, and private," said Randy Hopper, VP of Credit Cards at Navy Federal.
Hopper believes Apple Pay will spark industry interest in tokenization, possibly to the point where it will become a standard banking model. At its most basic level, tokenized transactions replace credit card data with generated Device Account Numbers, which in the case of Apple Pay is stored in a Secure Element inaccessible by iOS. When a payment is initiated at a compatible point-of-sale terminal, a token is transmitted and decoded by the backend payments system, leaving sensitive customer information out of the equation.
As an added bonus, banks will be able to use unique tokenized transaction identifiers to determine when customers use Apple Pay versus a physical credit card.
As for risk and liability, USAA Assistant Vice President Vikram Parekh said the same policies employed in credit card swipe payments will be carried over to Apple Pay. Chase and PNC also confirmed full liability protection will be extended to their customers.
"The bank has liability for any purchases made when Apple Pay is offered and used as the form of payment," Parekh said. "This is true for both face-to-face and for 'in-app' purchases."
Parekh also said USAA MasterCard and Visa card customers will be able to use Apple Pay starting Nov. 7, the first official release date announced by a banking service.
Apple is expected to roll out Apple Pay by the end of October, possibly as a feature in the upcoming iOS 8.1 maintenance update. Recent analysis of the latest iOS 8.1 beta 2 version revealed hidden Apple Pay settings menus and legal disclosures, suggesting the service will launch in the near future.
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75 Comments
Just curios, are there similar deals with Androids system? No doubt Gatorguy knows.
This is amazing. Apple gets the banks to pay them 0.15% for every $100 and to take on liability for fradulent purchases.
Of course it falls on their shoulders. That is where it is today. Apple is bringing a better solution which will actually minimize their risk until next year when it shifts to the merchant receiving the payment if they are not using one of the chip and sign systems. Since Apple Pay uses your PIN or fingerprint it is probably just as good or better (due to rotating codes, etc) so this will likely meet the requirements so that merchants using Apple Pay won't be liable for transitions completed with Apple Pay. I look forward to having a phone or watch that can do this. I personally miss the chip and pin solution I used overseas.
[quote name="digitalclips" url="/t/182742/banks-to-take-on-fraud-liability-in-apple-pay-deal-usaa-announces-nov-7-availability#post_2616097"]Just curios, are there similar deals with Androids system? No doubt Gatorguy knows.[/quote] Actually I had no idea but I knew how to look it up. Just Google it. ;) http://www.google.com/wallet//current-partners.html From the looks of things Google hasn't had near the level of commitment that Apple was able to put together. No surprise about that either IMO. A whole lot of players hadn't been willing to give up any potential bit of control until Apple and their millions of users stepped up. Google has limited influence anyway since they only supply the software and OS but can't dictate the hardware, Huge advantage for Apple in that regard.
[quote name="digitalclips" url="/t/182742/banks-to-take-on-fraud-liability-in-apple-pay-deal-usaa-announces-nov-7-availability#post_2616097"]Just curios, are there similar deals with Androids system? No doubt Gatorguy knows.[/quote] I've never known you for taking the low road before. Instead give Apple kudos for coming up with a payment system secure enough for the banks to assume fraud liability, and to answer your question, Android does not have anything like this. Google's implementation of a payment system was nothing short of a joke.