Apple Pay, a revolutionary new payment system where consumers can make payments with a touch of their finger on their new iPhone 6 and iPhone 6 Plus, will launch this Monday, October 20.
Apple Pay allows consumers to store their credit card information in their Apple Passbook, and then be able to touch or wave their phone to a pay terminal in participating stores. The phone uses an NFC (near field communications) chip to broadcast through radio waves to the pay terminal all the necessary information in order to complete the transaction. The Apple Pay system uses a unique number, called a token, for each transaction and that number can never be used again.
"The reaction to Apple Pay has been amazing. We continue to add more Apple Pay ready banks, credit card companies and merchants, and think our users will love paying with Apple Pay," Eddy Cue, Apple's senior vice president of Internet software and services, said in a statement.
Apple's introduction of this new payment system is coming at a time when consumers have grown leery of credit and debit card security. Data breaches have seemingly taken place every week at some well-known chain: Target, Neiman Marcus, Michaels, P.F. Chang's, Dairy Queen, UPS Stores, Sally Beauty, Supervalu, Albertsons, Home Depot and this week, Kmart. The Department of Homeland Security estimates more than 1,000 businesses have been affected by the Backoff malware that led to these breaches.
As a result, Apple's much-anticipated introduction of this new mobile payment system is expected to shake up the payment and smartphone industry.
Apple Pay supports credit and debit cards from the three major payment networks--American Express, MasterCard and Visa--issued by the top U.S. banks. In addition to Bank of America, Capital One Bank, Chase, Citi, Wells Fargo and others, who announced support in September, more than 500 new banks from across the country have signed on to Apple Pay.
Many analysts believe Apple Pay can significantly cut down on data breaches. Credit card numbers are not stored on the phone and not transmitted to the merchant. In addition, the merchant database now has no information that identifies you personally and only has tokens that can be used once.