Apple Pay has made a significant impact on the payments landscape - offering unparalleled flexibility in how people manage their payments. In this installment from the IR-Podcast, John Dunne, VP of Products, shares his thoughts on how Apple Pay is empowering consumers to embrace technology, like EMV, their everyday card won't allow and what this means for security and the digital wallet.
Scott Baker: Chip and pin is familiar security protocol, but is Apple Pay changing all that? Here to talk about it is John Dunne, Vice President of Products with Integrated Research. John, how is Apple Pay changing the landscape?
John Dunne: The first thing about Apple Pay is that you can only use it where you have tap and go enabled. And so, in some ways, you can only use it where chip and pin has been properly rolled out, but what it's enabled for me personally is to use my cards that don't have chip and pin in countries that only take chip and pin. And so, my great personal story here was I happened to be in Sydney, Australia when Apple Pay launched, and I was very excited. And, I woke up early in the morning, I updated my phone while I was on the train to our office, I stopped off at a little 7-Eleven on the way to the office and while I was there, I bought some breakfast and I loaded my Chase card into my Apple Pay while I was in the store and then walked straight up to the checkout and tapped my phone and paid for my breakfast. And what's great about that little story is the card I was using didn't have chip and pin, but in Australia you have to have chip and pin. And having a foreign card that has to be swiped and signed, there's a lot of terminals that you don't accept a mag strip anymore. So, one of the great advantages of this was I could take something that didn't have chip and pin security, like a US credit card today and use it in markets that require chip and pin security, and Apple Pay enabled me to do that.
Scott Baker: Does that new kind of flexibility present some new security challenges?
John Dunne: Well, I think the security challenges are, there are some pluses and minuses. I think the security behind Apple Pay, you know, there's certainly concerns over, you know, how good the fingerprint recognition is, and once your card is in there, can anybody falsify that and use your phone to make purchases? But at the same time, the pluses are Apple Pay has tokenization of the transaction. So, your credit card details are not being sent through the transaction verbosely. There's a tokenized version of it that changes every transaction. So if somebody were to somehow intercept the Apple Pay transaction, those numbers that they would be capturing are only good for that transaction, can't be used again. The other thing I do like about Apple Pay as well is that the device is only active when I'm holding it in proximity and I've got my thumb on the scanner. So if I'm walking down the street and someone has an RFID scanner and are trying to steal credit card numbers out of people's wallets as they walk past, they're not going to be able to steal anything from my iPhone.
Scott Baker: What's next? I mean, in terms of innovation and some of the things that we look at, and this is something that you guys monitor closely, what's next?
John Dunne: So I think having a digital wallet is the ultimate goal, and that can be in a device that's disposable like an iPhone. You know, everything's backed up to the iCloud and I can, if I lose my phone I just go and get another one. And if I think about what do I carry in my disposable wallet, there's some things that I know Apple are ramping up to roll out when it comes to loyalty cards. I might have my airline frequent flyer card in there, or my Safeway groceries loyalty card to scan. I will have tickets that are available in there as well. So, my concert tickets would just simply be secured in my phone and synchronized between all my devices. And if you go further from that, security credentials to access buildings. No longer do I need to carry a different security card in my wallet that anyone can walk past and potentially scan the ID of. I can just use my device to authenticate me at the checkpoints as I enter my work premises. So, I think that slowly but surely, the digitization of everything that you carry in your wallet is going to happen. And Apple are in a great position with their model of disposable devices to drive that forward. One of the ironies of Apple Pay is Apple Pay is only available today in the US with US issued cards. But the US is also the place that tap and go is very very early in its deployment. And so, if I look at market figures on how much Apple Pay is being used, I can understand why Apple started in the US. It's their backyard, it's where they can establish relationships with all the big partners that they need to. But at the same time, as they deploy Apple Pay into other markets, where EMV is available, people can just tap their cards and go. You know, in the EU, in Australia, I would expect to see the deployment of that to be much more significant, or the uptake much more significant as I can go out for a ride on my bike or walk the dog, and I just take my phone with me, and I can choose to make purchases if I want to. I don't have to worry about which cards I have with me. I have them all in my digital wallet.
Scott Baker: To find out more about Integrated Research Prognosis and how it can help you take control of your company's security, visit IR.com, proactive performance management solutions.