If you’ve watched TV recently, chances are you’re aware of Apple’s new venture into the payments landscape. And, you might be wondering not only how Apple Pay works, but also how your business can start accepting Apple Pay payments.
How does Apple Pay work?
Launched in October of 2014, Apple Pay is a mobile wallet solution that allows iPhone 6 users to use their phones to make purchases both in-app and at the point of sale.
To use Apple Pay, consumers load an Apple approved credit (or debit) card into their iPhone’s Passbook. Once the consumer is ready to pay for their purchase, they hold their iPhone near the merchant’s terminal. The NFC (near field communication) technology of the terminal recognizes the card information and securely processes the transaction. The cardholder’s identity is then confirmed using the iPhone’s “Touch ID.”
It’s pretty cool stuff. But, Apple Pay transactions aren’t as common as you might think, especially given the onslaught of ads currently airing on television. According to a recent survey by InfoScout, only about 10 percent of all iPhone 6 users have ever tried to use Apple Pay. But, it is likely those numbers will change over the next several months, given that the program is still in its infancy.
How secure is Apple Pay?
From a security standpoint, there are benefits to both the merchant and the consumer. First off, the consumer’s credit card information isn’t stored on Apple’s server—it’s actually stored on a “Secure Element” chip in the phone. Each card stored on the device has a unique “Device Account Number” that’s encrypted and securely stored on the element.
When the consumer makes a purchase, the Device Account Number and a transaction-specific dynamic security code are used to process the payment. So, the actual credit or debit card numbers are never shared with merchants or transmitted with the payment, thus creating a more secure transaction than a traditional card swipe.
Furthermore, if the consumer’s iPhone is lost or stolen, they can utilize the “Find my iPhone” app to quickly put the device in “Lost Mode” or wipe the memory completely clean so that no credit card information is vulnerable.
How do I set up my business?
It’s actually not that difficult to take Apple Pay transactions. Depending on the type of equipment you already own, the setup can be quite simple.
If you own a “contactless enabled” terminal, you shouldn’t have to do anything—you should be good-to-go. For those merchants not owning a contactless enabled machine, a contactless pin pad will do just the trick. One of the major benefits of Apple Pay is not having to hand your card over to someone else—having a contactless pin pad allows the consumer to hold onto their phone for the duration of the transaction.
One of the more popular equipment setups we recommend for small and medium-sized merchants is a Verifone Vx520 Dual Comm EMV non-contactless terminal (about $265) with a Vx805 contactless pin pad (about $240). However, there are certainly other compatible makes and models to choose from. Aside from possible equipment purchases, though, there’s no additional cost to the business for accepting Apple Pay transactions.
Lastly, before you go out and buy any equipment on your own, you should first visit with your merchant services provider. They’ll be able to advise you on the type of equipment, and they’ll also make sure your equipment is programmed correctly for contactless payments, including Apple Pay.
About the Author:
Bryan Fonville is a treasury management specialist and the director of marketing at Central National Bank. He enjoys running, reading (anything by Malcolm Gladwell), binge-watching House of Cards on Netflix, volunteering and playing the trumpet.