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WSJ: Apple 'laying groundwork' for mobile payments system

post #1 of 32
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A report on Friday claims Apple has expressed interest in handling payments for physical goods and services on its iDevices, suggesting a branded mobile payment solution is in the offing.

Payment
Apple patent illustration for a touchless mobile payment system. | Source: USPTO


Citing people familiar with the matter, The Wall Street Journal reports Apple CEO Tim Cook and SVP of Internet Software and Services Eddy Cue met with technology industry leaders to discuss a possible mobile payments system rollout.

Further, the publication learned that Apple tapped executive Jennifer Bailey to build out an in-company payment business. Bailey was previously in charge of running the company's online stores.

Apple is a late-comer to the mobile payments game as rival Google has been experimenting with so-called e-wallet technology for some time. In some implementations, Android handsets carry NFC technology that, in concert with Google Wallet, allow for touchless payments at supported POS systems. Despite early efforts and proliferation of smart devices that would serve as optimal platforms for the tech, a clear market frontrunner has yet to emerge.

With its various online properties, like iTunes and the Online Apple Store, Apple would have a huge installed customer base if it were to roll out a payments system. The sheer volume of credit cards on file would go a long way in convincing retailers to adopt an Apple-branded solution.

While Apple's methodology calls for a "go slow" approach, Over the past months, the company has been quietly laying groundwork that is quickly advancing toward a final solution. Passbook was released for iOS as a built-in app, though the software's functionality is currently limited to gift card, coupon and ticket redemption.

Most recently, iBeacon added another piece to the puzzle by granting iPhones the ability to make over-the-air payments. iBeacon's micro-location technology leverages Bluetooth Low Energy for two-way communication with in-store beacon nodes. Users can be alerted to deals, specials, store maps and other information, while providers can gather customer data.

In theory, iBeacon can be used as the backbone of a touchless payment system, though no signs of such an implementation have surfaced. So far, the technology has seen experimental adoption at a number of retailers like Macy's, as well as all U.S. Apple Stores.

Apple has filed for a number of patents regarding mobile payment, the most recent of which covered secure touchless payment systems.
post #2 of 32
Any trademarks for "iPay" being applied for?
Edited by ascii - 1/24/14 at 5:04pm
post #3 of 32
"Final solution?" Yikes. Those two words shouldn't be used together. Too much baggage. Way too much baggage.

Cool article content though. It's beyond me why it's taking so long. Perhaps they needed Toich Id to generate enough confidence. Perhaps it's also to be timed with the introduction of... New Apple TV that also works as an iBeacon pay center?
post #4 of 32
The biggest middle finger Apple could give Google/Nest/Wall Street/tech press would be to buy Square. I'd love to see them do it.
post #5 of 32
Apple needs to come up with a way for me to securely process a transaction with the iPhone/iPad without the need to expose any of my credit card information to the merchant. All the recent POS system breaches at TJ Maxx, Target, etc tells us that that the current system is too unsecure and needs to be fundamentally re-designed.
post #6 of 32

Interesting that their patent diagram includes NFC as well.

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post #7 of 32
Interesting and needed. The financial institutions are too incompetent to move to secure credit cards, like europe did decades ago. So, hopefully, Apple's solution will eliminate Visa, MasterCard and the whole lot of them, ending their expensive and useless monopoly.
post #8 of 32
Quote:
Originally Posted by waldobushman View Post

Interesting and needed. The financial institutions are too incompetent to move to secure credit cards, like europe did decades ago. So, hopefully, Apple's solution will eliminate Visa, MasterCard and the whole lot of them, ending their expensive and useless monopoly.

It should be possible to just transfer directly from your bank account to any company. Yes, the credit card companies are useless middlemen, but so would Apple be.

post #9 of 32
I've mentioned this a few days ago and I will say it again. I predict that the next iPhone will include NFC. They will combine their own technologies, iBeacan, Bluetooth, and NFC. Why am I so certain? Because the latest generation of Broadcom Bluetooth and Wi-Fi combo chips (as well as chips from other companies) now include NFC. In other words, Apple doesn't end to compromise their circuit board real estate to make room for it. It comes with the chip they use for Bluetooth and Wi-Fi. If it's there, in the chip, it's in the phone. It's possible that iOS 8 could launch without code making it available to apps, but not likely.
post #10 of 32
As noted above, the retailer's systems need to be made safe from attacks like the Target attack. The Target hack is especially important to Apple because it was tied to Target's POS terminals. Those are obviously the devices that Apple's iBeacon would be working with.

In terms of current credit cards, millions (including me) have loyalty cards. Mine is a British Airways Visa from Chase and we have had a few trips to the UK & Europe with those miles, and another trip or two (depending on class flown) available now. I'll pass on any system that screws up that benefit for me.
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post #11 of 32
I've mentioned this a few days ago and I will say it again. I predict that the next iPhone will include NFC. They will combine their own technologies, iBeacan, Bluetooth, and NFC. Why am I so certain? Because the latest generation of Broadcom Bluetooth and Wi-Fi combo chips (as well as chips from other companies) now include NFC. In other words, Apple doesn't end to compromise their circuit board real estate to make room for it. It comes with the chip they use for Bluetooth and Wi-Fi. If it's there, in the chip, it's in the phone. It's possible that iOS 8 could launch without code making it available to apps, but not likely.
post #12 of 32
Quote:
Originally Posted by RoundaboutNow View Post

Interesting that their patent diagram includes NFC as well.

NFC is part of the disinformation and distraction Apple uses to keep the competition chasing their tails.
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"That (the) world is moving so quickly that iOS is already amongst the older mobile operating systems in active development today." — The Verge
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post #13 of 32
Google and Samsung will make a big push to follow Apple into mobile payments but fortunately Apple already has all those credit card accounts on iTunes already. Too bad won't be easy for Google and Samsung to gather about 600,000 credit card holders overnight. Apple really should become a bank because they have enough cash to become one of the biggest banks in the U.S. I'd sure like to see it happen. It might even take Apple off the doomed list.
post #14 of 32
Quote:
Originally Posted by kenaustus View Post

In terms of current credit cards, millions (including me) have loyalty cards. Mine is a British Airways Visa from Chase and we have had a few trips to the UK & Europe with those miles, and another trip or two (depending on class flown) available now. I'll pass on any system that screws up that benefit for me.

Way to miss the big picture for a few trinkets.
post #15 of 32
Quote:
Originally Posted by RalphMouth View Post

Apple needs to come up with a way for me to securely process a transaction with the iPhone/iPad without the need to expose any of my credit card information to the merchant. All the recent POS system breaches at TJ Maxx, Target, etc tells us that that the current system is too unsecure and needs to be fundamentally re-designed.


See this:
Quote:
Using a Shared Secret

Apple notes that in one or more embodiments, a second secure link is established using a shared secret known to the portable device and the backend server, and using an alias to identify a purchasing account such as a credit card.

When a request to make a transaction using the credit card is submitted to the backend server, the server determines whether the combination of the alias and crypto data is valid using a shared secret that is known to a secure element in the portable device and the backend server.

The backend server uses the shared secret (e.g., symmetric keys, public private keys, etc.) to verify the alias and the crypto data. The backend receives the alias from the portable device via the point of sale device and combines the alias with other information, such as counter value known to both the backend and the secure element. The backend can then generate the same crypto data using the shared secret and received data, and compare the result with the received crypto data. If the comparison indicates that the values are the same, then the credit card that corresponds to the credit card alias is provided back to the partner, and the transaction proceeds as normal. Otherwise, the credit card alias is rejected and the transaction is denied.

http://www.patentlyapple.com/patently-apple/2014/01/apple-patent-reveals-secure-iwallet-system-with-ibeacon.html#more
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post #16 of 32
What I'd like to see is for Apple to bring this technology to retail with a bang. One holdup of making payments via phone and without a credit card reader (which all merchants have) is the equipment needed by the merchant. Forcing them to buy another device to handle an alternate payment system is a major hurdle. Apple should use some of their billions and simply give this thing away. Overnight they could become The Bank of Apple. Won't happen but I'd like to hope that it can.
post #17 of 32
Can't wait to see what Apple can bring to the table. NFC has never really taken off and its current adoption has been a mess, despite what the Android apologists want us to believe.
post #18 of 32

what about iWallet, or iMoney, or iShop, or iPurchase?

post #19 of 32
Quote:
Originally Posted by PeterAlt View Post

I've mentioned this a few days ago and I will say it again. I predict that the next iPhone will include NFC. They will combine their own technologies, iBeacan, Bluetooth, and NFC. Why am I so certain? Because the latest generation of Broadcom Bluetooth and Wi-Fi combo chips (as well as chips from other companies) now include NFC. In other words, Apple doesn't end to compromise their circuit board real estate to make room for it. It comes with the chip they use for Bluetooth and Wi-Fi. If it's there, in the chip, it's in the phone. It's possible that iOS 8 could launch without code making it available to apps, but not likely.

Don't hold your breath. I believe you will be proved wrong. 

post #20 of 32
At least this WSJ story is based on better sources than yesterday's WSJ story of larger iPhones.
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post #21 of 32
I'd like to see an iBeacon device. Google imaging that term only seems to throw up some images of the tricolour, third-party Estimote product.
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #22 of 32
"Apple is a late-comer to the mobile payments game as rival Google has been experimenting with so-called e-wallet technology for some time. In some implementations, Android handsets carry NFC technology that, in concert with Google Wallet, allow for touchless payments at supported POS systems. Despite early efforts and proliferation of smart devices that would serve as optimal platforms for the tech, a clear market frontrunner has yet to emerge."

When Google thought Apple was heading towards the television party, Google rocketed into televisions and proclaimed world domination. Apple never arrived. And Google's television proclamation is just one more failure.

When Google heard Apple was heading to the mobile payments party, it again rocketed into mobile payments with NFC and again proclaimed world domination. Again Apple did not arrive to the party. Google Wallet failed. Now Google is asking iOS users for pictures of their credit cards!

Apple is taking its time to figure out WHAT to do and HOW to do it instead of running full steam ahead into mobile payments and getting it wrong.

Providing a secure authentication system like Touch ID is a step in the right direction. Enabling purchases through Passbook is another step (I make Starbucks purchases regularly). Turning on mobile payments through its own online stores with Touch ID gives Apple major test bed to learn with.

So far Apple has been extraordinarily success with its mobile payments efforts. IF arriving late to get this stuff right while strengthening the customer TRUST factor means Apple is behind Google then I pray Apple stays behind Google!
post #23 of 32
Quote:
Originally Posted by wigby View Post


Way to miss the big picture for a few trinkets.

 

But how? If this works with my credit card, great, cause I get the reward points which is why I use the CC anyways. And if my credit card gets compromised, Chase pays for it. I don't lose a dime. So why lose out on free money?

 

Im all for this if it just charges my card with my phone and fingerprint sensor though.

 

(Disclaimer: I work for Chase)

post #24 of 32
Quote:
Originally Posted by kenaustus View Post

As noted above, the retailer's systems need to be made safe from attacks like the Target attack. The Target hack is especially important to Apple because it was tied to Target's POS terminals. Those are obviously the devices that Apple's iBeacon would be working with.

In terms of current credit cards, millions (including me) have loyalty cards. Mine is a British Airways Visa from Chase and we have had a few trips to the UK & Europe with those miles, and another trip or two (depending on class flown) available now. I'll pass on any system that screws up that benefit for me.

You might not have much of a choice about this if Apple manages to revolutionize the payment industry. As a small business owner myself I am hoping to God that Apple creates a popular alternative to traditional credit cards. I pay at least $70,000 per year to the credit card companies for the privilege of taking customer payments using their cards, and I'm sick of it. If Apple creates a significantly less expensive system for retail merchants, then Visa, Mastercard, and the like are toast. It might take awhile, but it will be inevitable. But before the card companies expire, they will start dropping their rewards programs and lowering their merchant fees.

post #25 of 32

I don't consider the free tickets on BA for my wife and myself to be "trinkets".  It has been a very good card for us and the only one I bother to have.

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post #26 of 32

$70K in merchant fees is enough to make anyone eliminate charge cards.

 

On the other side of the coin, how many sales were made because your customer had the credit to make the purchase, as opposed to having available cash in their wallet or bank account?  And can you be assured that you will not take a hit when that available credit on a credit card is removed?

 

I don't believe that Apple really wants to be in the banking business, but they may want a percentage of the merchant fees.  30% has been a good number for them in music, videos and books.  That may sound good to them.

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post #27 of 32
I hope they won't go for a 30/70 split for mobile payments ;-)
post #28 of 32
Quote:
Originally Posted by PeterAlt View Post

I've mentioned this a few days ago and I will say it again. I predict that the next iPhone will include NFC. They will combine their own technologies, iBeacan, Bluetooth, and NFC. Why am I so certain? Because the latest generation of Broadcom Bluetooth and Wi-Fi combo chips (as well as chips from other companies) now include NFC. In other words, Apple doesn't end to compromise their circuit board real estate to make room for it. It comes with the chip they use for Bluetooth and Wi-Fi. If it's there, in the chip, it's in the phone. It's possible that iOS 8 could launch without code making it available to apps, but not likely.
Not going to happen. BT Low Energy has been in every iPhone since the 4S. This gives Apple a huge installed base. If only new iPhones get NFC then their payment system is doomed because most iPhone users WONT have NFC.

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post #29 of 32
Quote:
Originally Posted by RalphMouth View Post

Apple needs to come up with a way for me to securely process a transaction with the iPhone/iPad without the need to expose any of my credit card information to the merchant. All the recent POS system breaches at TJ Maxx, Target, etc tells us that that the current system is too unsecure and needs to be fundamentally re-designed.
You are so right. Maybe that is why Apple is treading this space very slowly. Learning along the way. Also, if they get into this, they are taking on big onus if there is some such leaks. I am sure someone will come up with jamming the iBeacon and hacking it.
post #30 of 32
Quote:
Originally Posted by RalphMouth View Post

Apple needs to come up with a way for me to securely process a transaction with the iPhone/iPad without the need to expose any of my credit card information to the merchant. All the recent POS system breaches at TJ Maxx, Target, etc tells us that that the current system is too unsecure and needs to be fundamentally re-designed.

  I've been saying once TouchID is enabled on all iPad Minis, iPad Airs, and top of the line iPhones...  you've just 

1) created a smart credit card that never actually uses CC info on the wire [just encrypted tokens], that

2) identifies the 'card device' and the 'device holder' as well as the 'vendor' establishing bidirectional, one time trust, and

3) with simple timestamps, eliminated replay events... thus 

4) if you trust 'iOS' and 'Apple' for encryptions and PKI, there  is very little [zero (0) % chance of Id Theft, MiTM, Skimming, etc.

(never say never)

   

If the payment system has the vendor connected to apple, there is no reason for even the identity of the seller to be in the clear... everything is sent encrypted in Apple's Key, and then in either the phone's key or the vendor's key...  Skimming works by intercepting the card.   Now, basically, If Apple provides a key to the vendor... no information is shared until Apple vetts all players to each other (buyer to apple, vendor to apple, vendor to buyer, buyer to vendor), but other than to apple, the buyer (save for something to identify them if they desire some affinity program to the vendor) is anonymous.

post #31 of 32
Quote:
Originally Posted by EricTheHalfBee View Post


Not going to happen. BT Low Energy has been in every iPhone since the 4S. This gives Apple a huge installed base. If only new iPhones get NFC then their payment system is doomed because most iPhone users WONT have NFC.

iPhones have a 2 year half life in the G20 world, and the tech-engaged buy top of the line.  by 2017, 75% of the iphones will have TouchID, 50% could have NFC.   I'm not advocating for NFC nor think it's a winner, but iPhones are not G5 iMacs....  The turn over, especially in the 'spenders' space' [those that would most use a phone based mobile payment system a lot], will drive adoption quickly.

 

For me, the key is that first step... TouchID enablement.  Once that is done, the chain of proof is pretty strong.  Hence, my guess is that Apple needs 2 years of Touch ID (When the 5s becomes the 6c, and it's $50 on sale... watch touch ID penetration drive through the roof) to get to critical mass (about 40% of their 500Million iTMS account holders).

post #32 of 32
Quote:
Originally Posted by dacloo View Post

I hope they won't go for a 30/70 split for mobile payments ;-)

3% with a minimum $.30 charge makes sense;-).   To me the marketing is if Apple can significantly lower fraud.  If your loss rate for CC fraud is 5% and Apple drives it under 1% (80% reduction), the on a million dollar business thats 40K a year. 

 

If retail is a $200 Billion a year in the US (Comscore has 2012 at 186B), and the G10 effectively add 3X that.   800B, Apple aims for 10%... 3.5% of that... 2.8B in revenues.  50% margins.   1.4B in profits.  Nice little side business.

 

 

 

And that's before Apple becomes the 'bank.'

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