What you need to know about the future of paying for stuff. Editted by ehijoshua
Google has Google Wallet; Visa has payWave; MasterCard has PayPass; and American Express has ExpressPay. Apple just announced its own, with Apple Pay. If you've heard of any of these credit card services other than Apple's recently announced system and maybe Google's long-running program, we're impressed. You're in the minority; heck, one quarter of US citizens don't even own a standard credit card, let alone a virtualized one. But virtual payments are more prevalent by the year, and Apple Pay is giving the concept a much-needed publicity boost. So, all that said, let's talk about the future of payment.
Don't throw away your wallet just yet.
WHAT IS IT?
Google and Apple are using NFC -- "Near-Field Communication" -- to make this work. That means exactly what it sounds like: You put your phone or card near a reader and the reader accepts payment. We've got a video of Apple Pay in action right here!
Pretty simple, right? What's actually going on behind the scenes is a bit more complex, of course, but the implementation is meant to be painless. Ideally, even more painless than pulling out your credit card. And more secure, too.
HOW DOES IT WORK?Here's where things get technical, so bear with us for a moment. There are two main standards being used: NFC and ISO/IEC 14443. We already know that NFC stands for "Near-Field Communication," but it's worth also knowing that NFC devices produce a very weak radio frequency. This radio frequency is what allows them to communicate with payment systems, and it's that same radio frequency that the ISO/IEC 14443 uses: 13.56MHz.
Technical junk aside, what matters here is that both systems play nice with each other. And that's good, because a variety of credit card companies use the non-NFC system. Since those companies already outfitted retailers with their systems, no major change needs to be made for NFC-enabled phones to simply work as payment all over the USA. The list of vendors signed up for Apple Pay thus far is testament to that: Bloomingdale's, Disney Store and Walt Disney World Resort, Duane Reade, Macy's, McDonald's, Sephora, Staples, Subway, Walgreens and Whole Foods Market.
IS IT SECURE?
- Do Google and Apple keep my credit card information? The short answer is no. The longer answer still starts with no, but also points out that your debit/credit information is probably on file with both companies anyway through Google Play and iTunes. There's no reason to believe that either company can't be trusted with keeping that data safe, but Target customers and PlayStation Network users may feel differently.
- Could my phone be stolen and used as payment? Also no, at least not easily. In the case of Apple Pay, you need a fingerprint ID to use it. In the case of Google Pay, a PIN is required.
- Could my phone be stolen and debit/credit card info removed? Still no. Part of NFC's standardization is an aspect called the "secure element." This is the chip where personal information is stored, securely and encrypted.
WHAT ARE THE ALTERNATIVES?
A similar concept exists in the US, though it uses technology similar to NFC. It's this technology, in fact, that led the charge for virtualized payment in retail stores. It's no surprise that Visa, MasterCard, American Express and a mess of major US banks are on board with the new NFC tech from the likes of Apple and Google -- it's an evolution of technology they're already using.