iPhone with Apple Pay

The mobile phone is the new wallet-at least if Apple may determine. But is their payment service Apple Pay really safe, and will it ever work in Sweden? Macworld takes a look at the future of payments.

The card information is fed into the app Passbook is stored encrypted in a separate chip in my phone. Photo: Apple.

The smart phone has reduced our burden. Gone are the days when the bag was packed every morning with a portable music player, portable game console, compact camera, calculator or any other technology stuff as time ran out. Everything is already in your phone. An antique bears, however, we are still with us: the wallet. If Apple gets to decide it’s time to dump it.

So does Apple Pay
The proposed replacement is called Apple Pay and is a technology that is built into both the upcoming Apple Watch and in the two Iphone 6 models. The three units are the first from Apple which has been equipped with NFC, or “Near Field Communication”, a technology to wirelessly communicate with other devices over short distances.

Apple Pay was recently launched in the United States, but when the rest of the world gain access to the service is still unclear.

To be able to pay with Ios gadget is loaded debit card through the app Passbook. So far, Visa, Mastercard and American Express with the train. At the store’s cash placed the phone on a compatible payment terminal while the customer put his finger against the fingerprint reader Touch ID. The purchase is confirmed by a beep and vibration and is now completed.

The same method is used when you shop online at the Apple Pay-enabled apps: tap the icon to scan your finger.

With Apple Watch, which lack Touch ID, retail payments instead performed with the button on the side of the watch. According to early reports, Watch users are authenticated by a code is entered when the Bell is attached to the wrist. The sensors on the back of Apple Watch then feel if the watch is taken off, and turn off Apple Pay until the code once again tapped into.

Even the upcoming Apple Watch use to payments. With the help of the watch can also phone in iPhone 5 series used to Apple Pay.Photo: Apple.
According to early reports from the United States appears to be Apple Pay as a convenient system, but Apple had to overcome a lot of problems before the system can break through on a broad front.Most worrisome for Apple perhaps is that the road to success is lined with a series of more or less failed attempts from other companies.

So far nobody has been able to
With the Nokia 6131 NFC were participants in a pilot project in London make payments in some stores as early as 2007. Google, for its part, launched their NFC-based service Wallet 2011 in the United States. In the same market, there is also the solution Softcard, and around the world there are many other mobile payment services.Here in Sweden is probably the best-known Seqr – or rather the least known. So far, none of these digital wallets struck through on a broad front.

What exactly is the problem?

Hard to compete with the cards
A simple explanation is that we are not yet ready to be separated from our plastic cards. When analysis firm Insight Intelligence recently did a survey on the Swedes ‘ bet the elven ancestry revealed that most of us actually like our debit card. Card payments is the payment method that has the broadest support among users, and nearly nine out of 10 respondents say they use cards every week or more often.

NFC is not just for mobiles. In Sweden we see rarely debit cards with the technique, but out in the world is the more common. In the picture a debit card that is used for a subway ride in London. Photo: Mastercard.

According to the same survey, there is a clear lack of interest in mobile payments. 71 percent of respondents say they never use pay apps as Seqr and Wywallet. The proportion of using paid apps a few times per week amount to modest 3 per cent.

Perhaps it is not very strange. Paying by card is already so that habitual, easy and safe to get one finds reason to seek new solutions.

A shift in stages
KTH researcher Niklas Arvidsson has specialized in payment systems. He believes that the shift from card to phone will be done in stages. As an example he mentions the banks ‘ service Swish. It acts as a substitute for cash and help users to make instant transfers to each other through an app. that consumers get used to Swish in your phone will be a first step, says Niklas Arvidsson. When the habit is in place, it can also be transmitted to the retail trade.

KTH researcher Niklas Arvidsson says that mobile payments must offer added value if we should give up our plastic cards.

At the same time, he called for more of the services that try to replace plastic boards.

– Credit card payments is some kind of benchmark, and there must be an added value to mobile payments will hit seriously. It may differ between the generations because the younger not mired in a card payment behaviour. But they are already fixed in the behavior needs a value, and there is not quite yet, “he said.

Million potential users
If Apple Pay can break the habit, we know not yet, but it is clear also that Apple is approaching the cards with caution. Apple Pay deals as soon as possible if a minor relocation of cards, from their physical form in your wallet to a digital version of the app, Passbook. It distinguishes the service from competitors like Seqr, which bypasses the payment systems that are already in place. When Tim Cook recently interviewed on American television, he was clear about this approach:

“It turned out that people love their debit card. There is something with the cards which make people attach to them. We are trying to get people to like it even more, to make the experience better.

Filling in forms for online payments is not the most fun. With Apple Pay to process is replaced by a button and a finger scan of compatible apps.

If Apple can actually achieve the feat remains to be seen, but it is clear that the company already has one foot in the market. Today, there are about 800 million active Itunes accounts, many of which already have affiliated debit card. It can be compared with 150 million payment giant PayPal’s active accounts.

Giant chains that stops Apple Pay
On the 20th October launched Apple Pay in the United States.Companies like McDonald’s, Macy’s and Subway are connected and contribute together with other chains to about 220 000 shops and restaurants officially accept Apple Pay.

In conjunction with the launch, however, it became clear that the system can also be used in other shops. Any official condolences from the merchant’s site is not required. If there’s an NFC terminal at the checkout, there is also support for Apple Pay.

Even before Apple Pay was launched, it was clear that a number of big players had other plans for the future of payments. Giant chains,Walmart and Bestbuy declared early his disinterest in Apple’s solution. They should instead focus on its own system for mobile payments and have joined forces in the Organization, including chains such as MCX 7-Eleven, CVS and Rite-Aid is included. The Coalition is developing at the moment the mobile payment solution CurrentC.

The American stores that use CurrentC will not allow competing mobile payment services. That Apple Pay turned out to work on the NFC the machines of MCX-retailers fell in good soil. In the days after the launch, chose several of the participating chains to deactivate their NFC-terminals. According to the New York Times at risk of MCX-traders who continue to accept competing payment systems fine.The lack of NFC means that neither Apple Pay or Google Wallet can be used with these traders.

CurrentC uses for its part is not NFC, but rely instead of QR-codes.Another distinctive feature is that customers ‘ bank accounts are connected directly to the service, which means that participating chains do not have to card fees.

CurrentC has already before the release accused of wanting to shoe up on users ‘ data, and amid the criticism that currently meets the service also reported that hackers have accessed a number of email addresses belonging to users who are participating in a pilot program for the service.

Apple takes matters with ro, at least outwardly. In a statement to Business Insider on Monday the company announced that they’re working on connecting as many dealers as possible to Apple Pay, without mentioning CurrentC. On the same date set Apple Ceo Tim Cook on stage during the Conference WSJD, and he expressed himself more directly.

“It’s a skirmish,” said Cook. Traders sometimes have different goals, but in the long run, you are only relevant as a shop or dealer if your customers love you.

Card companies will require NFC
Likely also many smaller shops to remain outside the system, put off by the cost of NFC-equipped terminals. At least at first. In the United States is still the aged combination of magnetic stripe and signature for card purchases, but not for long. In the next year begins card companies require that us traders offers a so-called ‘ chip & pin terminal for card payments, i.e. the variation that is already standard here in Sweden. Stores that declines may themselves bear the cost of card fraud. At the same time, many shops are expected to select terminals also support NFC.

A similar development can also take place in Europe, but here, it will take longer. MasterCard announced recently that European merchants that accept their cards must support NFC payments by 2020.

Many payment terminals in the Swedish trade lacks the NFC, but the providers are now underway a shift to Apple Pay-compatible hardware. In the picture a terminal connected to the paid service Seqr.

Swedish trade soon prepared
When we’re calling around to a number of Swedish companies that sell payment terminals is repeated a coherent view. No exact figures on the number of NFC-terminals, we must not, however, all the companies say they are betting on NFC-friendly terminals and that older models will be replaced over time. For some, it is a great project because many customers are sitting on older models, others will shift to go faster.

Madeleine Lang, head of business development at Payzone, is optimistic and says that much will happen during this year.

– Now place a huge shift from the old generation to the new terminal. We are up in the Exchange now and every day shifts we out the old against the new NFC-enabled terminals, she said.

That shift is afoot in the shops, however, is of little comfort for the Iphone-using Europeans. It is still uncertain when Apple Pay reaches Sweden – and the rest of the world. Apple has said that they’re working on it, but more than that, we do not know at present.

Apple does not want to know
So, what has Apple to win at their new service? According to anecdotal evidence from the newspaper the Financial Times, Apple to 0.15% of each transaction. It corresponds to 1.5 million SEK for each billion passing system. The agreement therefore requires large purchase volumes before Apple makes some significant merits. However, the indirect function can also lead to increased sales of phones and watches.

User data should at least serve as a source of revenue, according to Apple. When Apple Pay was unveiled Apple clear that they neither can nor want to see where your users is or what they buy.

Madeleine Lang on Swedish Payzone think the shift to NFC terminals in Swedish stores will go quickly.

For Apple, this strategy becomes a selling point that set Apple Pay from datainsamlande, for example, Google Wallet. KTH researcher Niklas Arvidsson thinks it can give business impact:

“I think that to some extent can be Google in the keg. Google’s main business is information, and it is clear that people can become suspicious when they handing over their payment information. Then, one should always be a little skeptical when companies say that they do not collect information, because everyone now is talking about using consumer data. I don’t distrust what Apple says, but it is clear that there is a value in the information, even for them.

Is Apple Pay really safe?
In a press release, Apple said that security and privacy are “at the core of Apple Pay”. Behind the proposition is a technique called tokenization. It is based on the card number that is now fully visible on our plastic cards are replaced by digital “tokens”. The card number is stored in your phone or never watch, or for that matter on Apple’s servers. At each transaction is also generated a unique engångsnummer to approve the purchase.

Samsung’s Galaxy S5 like the Iphone a fingerprint reader. Through a partnership with Paypal can be used for online payments. Photo: Samsung.

In practice, this means that neither the merchant nor anyone else in the area can see the user’s credit card information. The system is also reinforced by two hardware solutions. One is Touch ID, which requires biometric identification by the user’s fingerprint. The other is a separate chip in the phone that is called ‘ secure element “.Where that information is stored encrypted and, according to Apple, in safety.

Compared to a normal debit card thereby added new layers of security, but that does not mean that Apple Pay is guaranteed to be impenetrable. Apple Pay is still fresh, and we learn soon become aware of potential security hole in the system. That malicious hackers will do their best to crack the system is a lågoddsare.

Anders Olofsson on the police’s national fraud center says he is not sufficiently informed to assess the technical conditions in Apple Pay.He is, however, positive to the multi-factor authentication, which means that a thief needs access to both phone and fingerprints. He notes however, that no system is completely secure.

– Often armoured doors of steel, but too often there are back doors of Masonite, and they will always be discovered sooner or later, “he said.

Researcher Niklas Arvidsson compare mobile payments security with the travel cash cards made by decades. From the early magnetic strips that were vulnerable to skimming to today’s more secure cards with chip and pin. He believes that Apple Pay and other new systems will undergo a similar trip with numerous problems and childhood diseases.

“It is reasonable to expect problems. The question is how to solve the problems that arise, “he said.

During the first few days with Apple Pay reported several such childhood diseases. Some customers said they dubbeldebiterades when they used the system, while other users say that they have had to use both Touch ID and pin to complete the purchase.

Plastic boards gone in ten years
We speak with the industry representatives are hopeful about Apple’s payment system, but none of them dare to say with certainty that Apple Pay actually is the future. Apple’s limited market share is a factor. Another uncertainty stems from the fact that we do not know which banks Apple will work with at an American launch. In addition, many companies already tried, and failed, to reach a mass market with mobile payments.

In General, however, the industry appears to be in agreement that the future of NFC payments, whether the technology is built into a card or a phone with the associated app.

In anticipation of Apple Pay, Ios users in Sweden carry out mobile payments using qr codes. They are used by service Seqr.

Johannes Reichhuber is responsible for business development at Babs Paylink, a company that sells payment terminals on the Swedish market. He is one of those who believe that mobile payments will be passed in time.

– Apple Pay is just one piece of the puzzle. The service is limited to Apple and there are other ways to solve the mobile payments, and other providers with similar systems. There are many different pieces of the puzzle, but obviously Apple Pay to change quite a lot, “he says.

When we ask the researcher Niklas Arvidsson speculated on how we make our payments in the future, he points out that the trend towards a cashless society is not nearly as clear in the whole world as it is in Scandinavia. In southern Europe the use of cash has even increased in some countries, “he said. In our latitudes, he believes, however, that things will change and that so-called biometric identification, such as fingerprinting, is becoming more common:

– In Sweden and the Nordic region, we almost don’t have any cash at all. Plastic boards will probably be gone, but we will make payments with your mobile phone instead of a piece of plastic. I think that biometric identification solutions will have been established for 10 years, although it doesn’t have to be just Apple Pay, says Niklas Arvidsson.

So does Apple Pay in practice

SEQR (pronounced “secure”) is found in about 4,000 Swedish traders, and the company calls itself the most used mobile wallet.NFC support exists, but Ios users currently use qr codes. SEQR connects to a invoice account and to get a credit check is required first. Then, send a letter with a Seqr qr-code that activates your account. In-store purchase scanned the code at the checkout and then a pin is entered to confirm your purchase. SEQR can also be used for services such as payment of parking and transfers.

Operators Teliasonera, Telenor, Tele 2 and Three created along Wywallet, which probably is best known for the criticism it faced at its launch last year. Wywallet works for sms purchases, transfers, recharging of prepaid cards, and purchases at certain sites. Currently in progress also tests for retail payments with Wywallet in Telenor’s stores. They are performed by the user to enter the mobile phone number of the POS terminal and approves the purchase of the app. Instead of mobile phone number may also be a sticker, equipped with a Wywallet chip, be used.

A couple of years ago, some of the largest banks together to develop a solution for mobile transmissions. The service is called Swish and connected to a bank account. Transfers to other users is simple and only requires that you enter the recipient’s phone number or Swish-number. Swish may be useful when the Bill will be shared between friends, but payments can also be made into Swish-affiliated companies. It allows for cash-free payments in everything from boutiques to flea markets.

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