Monthly Archives: December 2014

Apple Pay: What Does It Have in Store for Online Merchants?

In the world of accepting online payments, credit and debit cards are the industry standard. And for good reason– they’re convenient, and they’ve been around for decades.

But while they’re the go-to payment option, merchants continue to struggle with their vulnerability to fraud.

So that got us wondering– at some point, the credit card was a new invention and appeared to be the payment solution of the future. It was a paradigm shift from the written bank check, which was itself an invention over cash and hard currency. And each option has pushed us into a new era of thieves trying to crank out a payday– sometimes digital, sometimes physical.

So, what’s next for the digital age? Apple is hoping to introduce a new era with Apple Pay. Does it have the moxie to move us beyond the credit card and associated e-commerce fraud?

Mobile payment: Apple Pay
You can’t tap your scroll wheel without clicking through a headline for Apple Pay. And it makes sense– digital-physical hybrid payment options have been trying to take hold for several years now.

While Google and Microsoft have tried their hand at mobile payment methods, Apple’s recent release of Apple Pay is the first to show encouraging signs of nascent adoption. With the smartphone now ubiquitous, the ease of use at the cash register for this type of payment method becomes more compelling.

Apple Pay has immediate benefits for merchants taking CNP payments as well. Apple Pay incorporates fraud detection technology such as TouchID biometric sensors, NFC, and geolocation data. Apple is banking on these features to make Apple Pay more attractive to merchants, and is even going so far as to assume some of the risk of fraudulent transactions themselves.

The future of payment security
Apple’s initial Apple Pay push covers 35 brick and mortar retail stores and provides a new opportunity for widespread use. But considering the amount of consumer data and financial information involved, consumers and merchants alike are sure to closely monitor what E-commerce fraud detection looks like as new payment options spread online within Apple apps.

NFC payment systems are incorporating unique digital signatures and Apple Pay is moving personal data off servers to thwart fraud. At the same time, Apple Pay and other mobile payment options are really no more than glorified credit cards. Is the new technology real progress, or will the fraudsters just step up their game? Adaptation of the new payment methods will be slow, so it will be some time before we can tell.