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How Apple Pay works and why it matters for developers

184 points by johndbeatty 12y ago

panabee 12y ago
One reason Apple Pay matters for developers and startups is it erodes a key advantage of leaders and incumbents. By dramatically reducing the friction around account creation and payments, Apple Pay makes it much, much easier for consumers to try new services. Ride sharing services, for example, could benefit from this. Of course, it will take a while for the effects to be felt, but increased competition in commerce is a positive long term implication of Apple Pay.
- XorNot 12y ago
  It really doesn't do this. Apple Pay is not the solution to moving money between parties who aren't registered merchants, with the relevant banking setup. Anyone can be become a merchant with a PayPass reader today. Apple Pay is not changing that, nor can it since that sector is entirely dependent on local commerce/finance laws and payment processor anti-fraud costs.
  - panabee 12y ago
    Apple Pay is focused on easing consumer pain and friction, leading to more competition among service providers and retailers since trying new services will become easier for users.
    - XorNot 12y ago
      Ok now I'm not sure which aspect you're talking about. Because in the physical world the friction is not "oh I need a card" it's physically getting the customer in the door. Otherwise, what's involved is needing merchants to have NFC readers. This might be an exciting new thing in the US, but certainly in my neck of the woods NFC has near universal penetration. In the virtual world...this problem has been solved over and over and over. I'd argue it would be very surprising to see Apple displace Paypal. Everyone has Paypal - very few people (relatively) will have ApplePay.
      - aianus 12y ago
        > Everyone has Paypal - very few people (relatively) will have ApplePay. Today Paypal has something like 150 million users worldwide while there are 72 million iPhone users in the United States alone. Presumably all of these people will eventually upgrade to an iPhone supporting ApplePay.
        XorNot 12y ago
        That is a big assumption. Phones have been getting a longer and longer tail. Moreover, there's almost certainly >50% overlap between iPhone user/Paypal user/other service user.
  - ThrustVectoring 12y ago
    Apple Pay makes developers able to pay merchants on behalf of their customers without becoming a credit card processing middleman.
  - rtpg 12y ago
    Having first-class OS support for the payment method (and the fact that a huge amount of people have been forced to register a credit card through iTunes at one point or another) means that the consumer barrier to entry is super low.
    - simonh 12y ago
      > forced to register a credit card through iTunes I'll never forget the day they held a gun to my head and made me buy my first iPod. Just so I get the terminology right though, when you register a card within itunes Apple is forcing you to do so, but when you register it with Google Play, Google is reluctantly allowing you to do it. Did I get that right?
      - rtpg 12y ago
        In some countries there have been periods where the only way to make an iTunes account (and thus get access to app store) was through registering a credit card or buying an itunes gift card. Google Play does not ask for a credit card unless you actually make a purchase.
aapl_bad_stream 12y ago
Pay? What about paying for decent streaming. The keynote was a more like a bum note.
Schweigi 12y ago
Apple Pay uses industry-standard EMV contactless protocols over NFC (and MSD contactless for backward compatibility). This makes it compatible with a wide range of contactless payment terminals in deployment today. So if the last section of the article is correct that means ApplePay will be compatible with Mastercard PayPass terminals? If this is true it would be really easy to roll out ApplePay as for example in Switzerland most terminals are PayPass ready.
- johndbeatty 12y ago
  Apple Pay is very standards compliant and the networks are very global. So I wouldn't be surprised.
  - iancarroll 12y ago
    This is also great for us Android/GWallet/Isis/Softcard users, as more merchants will want EMV and have it implemented.
- ThrustVectoring 12y ago
  As far as hardware goes, yes - the same antenna you use for talking with a MasterCard can get used for talking to a smartphone. However, POS software is not at all standardized. You'd likely end up rolling out support for one POS platform at a time. They'll have the hardware you need to support ApplePay, but the rest of the work is probably tricky. tl;dr POS software systems that accept PayPass can change their software to accept ApplePay.
  - ChrisClark 12y ago
    That sounds different than Google Wallet. With an NFC Android phone you can pay at any PayPass terminal, without them needing to change their software.
    - ThrustVectoring 12y ago
      I will admit that I might be completely wrong about the technical requirements for this. I'm sure that at least the hardware will support it, and from what I understand there may be a difference in how the terminal goes from talking with a payment method to a verified payment.
apple_suxor 12y ago
I can haz reliable streaming of my keynote now?
3JPLW 12y ago
> com.apple.WebKit.Networking.xpc wants to sign using key "Apple ID Authentication …" in your keychain. Do you want to allow access to this item? http://imgur.com/n3Ay8Ik http://imgur.com/n3Ay8Ik What is this? I've never seen this before. Loading (and reloading) pages from this domain prompts this popup.
- astrange 12y ago
  That would be SSL Client Certificates!
induscreep 12y ago
How does Apple pay differ from Google's ecosystem and whatever it provides? There, the smartphone app (Google Wallet vs passbook) and the hardware is not made by the same people (Samsung vs Apple) - so does this pose any problems?
- natrius 12y ago
  Apple Pay gets a token from your card issuer and uses that to pay. Google Wallet pays with their own card and charges your card the same amount. Only difference I see is that Google knows about every transaction you make. Apple doesn't.
  - stephenr 12y ago
    Wow that's creepy and yet completely unsurprising from google..
    - damian2000 12y ago
      That data is fed into their Google Now servers, so that it can predict your buying patterns, hence offer you contextual adverts just as you're planning to buy something. /joking
  - induscreep 12y ago
    Well...TIL. Is there any good resource to learn about the technical side of how payments are processed, and this new tokenization/network-level tokenization effort (http://clover-developers.blogspot.com/2014/09/apple-pay.html http://clover-developers.blogspot.com/2014/09/apple-pay.html)?
itry 12y ago
So we want to make payments via our phones. My first thought would be to create a protocol for this. Instead we get ApplePay and GoogleWallet and whatnot. If the internet was invented today, we would have AppleMail instead of email and GoogleTrans instead of http.
pbreit 12y ago
I haven't seen yet how (or if) recurring payments are supported. Anyone know?
- redstar504 12y ago
  See page 5 of this document for evidence that recurring payments are indeed supported. https://developer.apple.com/apple-pay/Getting-Started-with-Apple-Pay.pdf https://developer.apple.com/apple-pay/Getting-Started-with-A...
tonyb 12y ago
The part I'm not quite following is when the tokenization takes place. If it takes place per transaction then the PAN must be saved in the phone somewhere and the phone would have to be online to do the tokenization in real-time. If it is a one-time tokenization that happens when the card is added isn't that token just as valulable as the PAN since the token can be used across merchants? Maybe the 3-D secure piece of the puzzle protects the token but I think this still means the phone has to be on-line to use the NFC payment feature.
- debt 12y ago
  I would think compromise of the token, while bad, is way less bad than compromise of the PAN. I would think it's much easier to regenerate the one-time token than to create a new PAN.
  - iknowthisstuff 12y ago
    The token seems to be generated randomly (per transaction) in the Secure Element. See my above post.
    - tonyb 12y ago
      I don't think that is quite correct. There is per-transaction stuff going on but it isn't being tokenized for every transaction. The token is stored in the secure element but is generated by the Token Service Provider (for example Visa Token Service). After reading the EVM token spec linked in the post[1] and the developer guide I think I'm able to answer my own question. The card is only tokenized once (or at least not per-transaction). For in-app purchases it is using 3-D Secure and for NFC is it using EMV, both of which provide some per-transaction security. Unlike a standard card the token will only work with 3-D Secure or EMV. For example a standard Chip&Pin card could still have it's mag-strip data extracted by a malicious POS system and used at a merchant that only uses magstripe terminals. With Apple Pay (and any other network token based system) a copied token would be worthless because it can't be used at a magstripe terminal. Basically the phone is acting both as an automated 3-D secure checkout (it is processed by the processors just like 3-D secure but the authentication process is automated) and as a contactless EMV card without the downside of also having a magstrip with the PAN on it. [1]http://www.emvco.com/specifications.aspx?id=263 http://www.emvco.com/specifications.aspx?id=263
21echoes 12y ago
> Apple Pay marks the first time a popular operating system is making payments a platform service for real-world, non-digital-good transactions, in a broad, inclusive manner that is compatible with the mainstream payments processing industry I'm sorry... what? How is this different from Google making Google Wallet back in 2011? They both use the same tech (PayPass, an industry standard), and both are made by an OS company.
- gress 12y ago
  Google wallet was unpopular and was impeded by the cell carriers. It was a business failure, not a technical one.
  - 21echoes 12y ago
    Sure, I totally agree that Google Wallet was basically a business failure. I'd also say that the only thing that may stop Apple Pay from being a business failure is that it's Apple doing it this time (even tho, frankly, their UI looks significantly worse than Google Wallet, and has far less functionality, and Google Wallet is no longer impeded by the carriers)... But that's not what the article section i quoted was talking about. It just made an unqualified claim "this is the first time an OS maker has made a payments product for the physical world"
    - GuiA 12y ago
      I've never used Google wallet- but how could Apple's UI be worse? All you do is tap your device. How did Google Wallet work?
      - rstupek 12y ago
        Yeah I found that to be mildly humorous. Not sure how the UI is terrible, it looks pretty simple and well thought out
      - 21echoes 12y ago
        that's the payment experience, sure, but there's all those moments before and after your payment. say, adding a card, managing which cards you want to use at which locations, etc. there was plenty of footage in the live stream this morning, or stills here: http://www.apple.com/apple-pay/ http://www.apple.com/apple-pay/ but the bigger point: you're quibbling over the first of three points i made in an aside (the other two being that google wallet has way more features, and that google wallet is now not blocked from being on Verizon et al). The larger point is that the article saying that this is the first OS to have a payments solution is... very strange.
cdnsteve 12y ago
Maybe it's just me but I'm not drinking the kool aid about Apple Pay in today's announcement. Aside, I really hated the fact that to watch the event you had to use a Safari browser, same with watching Swift tutorial videos on their website, using latest Chrome on a Mac... Maybe I'm old school but I'm actually finding that payment options are getting worse, not better. This is another example of further fragmentation. Tap cards, stripe cards, chip cards - all the machines have different interfaces, some touch screen, some with pens. Not sure about you guys but I forget my credit card pin compared to my bank card pin half the time. I have a way to many accounts to remember already. What happened to just a signature? It's like someone needs to come up with an interface for payments. That universally accepted. Think of a wall socket for power, 3 prongs, supports 2 prong interface. Works great. Lets step back. Oh wait, we have one. It's called CASH. Cash seems to make more and more sense these days. No overage fees for using your own money. Accepted everywhere already. It doesn't get malware and steals your data. It doesn't need charging or have bugs. Doesn't seems as easy to spend when you physically see it leaving your old school wallet. I for one won't ever use my phone for payments nor will I be looking to work on apps trying to convince others that its fairy land for payments and makes your life better because of revolutionary Apple marketing spiels. Virtual apps on the app stores, fine, I see it makes sense. Brick and mortar, I just don't see it.
- GuiA 12y ago
  The problem of capitalism is that all agents want (amongst other things) full vendor lock-in. Sadly that's been our general direction for the past 50 years in most aspects of life, and there seems to be little hope for reversing the machine in thr short term.
  - innguest 12y ago
    That's not the "problem of capitalism", that's the problem with bad people that are power hungry and uninformed people that see absolution in centralized power. I'm very hopeful that we will be able to reverse this trend as I see decentralization efforts everywhere (internet to press, 3d printing to manufacturing, bitcoin to currency, blockchain to public ledger, photovoltaics for power, etc).
thinkling 12y ago
I'm very curious about the business side of ApplePay. Is Apple going to get some (miniscule) cut of every transaction performed? I.e. is this a new revenue stream for Apple?
- kunaalarya 12y ago
  they said in their faq that they won't be taking a cut. Either this is purely for improving the ecosystem, or they're getting a cut from banks for cutting down fraud.
  - iknowthissuff2 12y ago
    The latter is most likely
gaius 12y ago
I assumed from the headline this would be about Apple's wage-suppressing scam.
bsaul 12y ago
A few counterpoints to having your phone used as a payment device : - it breaks more easily and wears out quicker than a card - you can't lend it to a friend to have him buy stuff for you ( i don't have a pass id iphone so maybe i'm wrong on this one) - it gets stolen more often because it has intrisic value ( and a big one for the iphone) - if it gets stolen, how are you going to call your bank to disable it ? Plus, retrieving fingerprints from a stolen iphone was demonstrated last year and seems pretty easy. Now that iphones will be used to pay, you can expect criminals to get very familiar with the technic very fast.
- JakaJancar 12y ago
  > - it gets stolen more often because it has intrisic value ( and a big one for the iphone) Not really, if you can't activate it. - if it gets stolen, how are you going to call your bank to disable it ? You'll go to icloud.com and deactivate it yourself.
- jhgg 12y ago
  >- it breaks more easily and wears out quicker than a card I don't know about you, but personally I use my phone far more all of my credit cards combined on a daily basis. Is pulling out my phone to process a transaction going to add additional ware to it? Probably not. It's most likely out already from me using it while waiting in line.
- a_c_s 12y ago
  It would be great if the HN crowd would stop critiquing things before learning how they work. - If your iPhone gets stolen then you deactivate it via Apple's existing Find My Phone feature. Deactivating your device will block payments but you won't have to talk to your bank nor will you have to get the cards themselves replaced. - You can use a password instead of the thumbprint to pay. So you could indeed lend your phone and password to somebody for them to buy things for you. Or you could just reimburse your friend for whatever they purchased. - People already have a working smartphone on their person at nearly all times, I don't see how "wearing out more easily" is much of a critique. Nobody is suggesting that once somebody starts using ApplePay they destroy the corresponding physical card.
- 12y ago
mrweasel 12y ago
The 3DSecure stuff gets a bit weird, do you still get redirected to you banks 3DSecure page? If so I don't see that working to well in at least some countries (I know Apple Pay is US only for now). In Denmark a large number of banks would present you with a Java applet on the 3DSecure page, that's not really going to work on the iPhone.
LeicaLatte 12y ago
eBay should have spun off PayPal when they had the chance. With this year's double blow of Amazon Payments and Apple Pay, their end seems near.
f3llowtraveler 12y ago
The future of payments is Bitcoin.
exelius 12y ago
I'm curious how much, if anything, Apple makes off of this. It's pretty clear they're not displacing anyone in the existing merchant payment value chain (which is the mistake most other companies have made) but it's not clear how Apple makes any money off of this. I have a hunch that Apple might not be making any money at all off of Apple Pay. Apple operates their business very differently than many tech companies. The vast majority of Apple's profit comes from the ridiculously high margins on their hardware. They develop services to increase the capability of the hardware platform; and any money resulting from the operation of those services is secondary. When Apple initially released the iTunes store, they operated it at a loss. The entire iTunes store and all the payment systems, etc. that go along with it were built in order to sell iPods. There's a very real possibility that Apple looked at the mobile payment market and said "Shit, there are way too many entrenched interests for us to insert ourselves in the value chain and take a cut. But having a superior mobile payment system will help us sell more iPhones, so we'll do it anyway." Those entrenched interests are what have kept every other mobile payment company from making a real dent in the overall payments ecosystem. Unlike with iTunes where Apple made demands about how the store had to function, they placated the industry while coming up with a solution that worked for both end users and the industry players. We'll see if it catches on, but I expect it will.
- gambiting 12y ago
  >>The vast majority of Apple's profit comes from the ridiculously high margins on their hardware. I am not saying you are wrong, but could we see a source for that please? I always assumed that no matter what they do, the profit margin on hardware cannot be THAT large, because the costs of R&D and marketing for apple devices must be huge(they ship with their own in-house developed operating system,after all), so I always assumed that Apple makes most money off platforms like iTunes, not hardware profits. I would be very happy to be proven wrong though.
  - exelius 12y ago
    I don't have an explicit source; but we can back into the numbers. Apple only breaks out COGS for the entire company; not by division. But regardless, the iTunes division is dwarfed by the iPhone/iPad/Mac divisions. Apple's gross margins are right around 37.5% -- which is very high. The average for the computer/electronics industry is closer to 20%. If you look at historical trends through their past SEC filings, you'll see that margins have actually been declining, and that iTunes was only a significant percentage of revenue for the last couple of years. It was less than 1% of revenue before 2007, so it operated as a very small part of the company for the first 10 years of its existence. Online media direct sales are actually not as big of a business as you might think -- for example, Steam alone did more revenue than the entire online movie sales/rental business (not counting subscription services). As a percentage of revenue, Apple's operating expenses (which include R&D and the operation of the Apple stores, servers, etc.) are pretty low -- less than 10%. All of this info comes from Apple's 10-K: http://investor.apple.com/secfiling.cfm?filingID=1193125-13-416534&CIK=320193 http://investor.apple.com/secfiling.cfm?filingID=1193125-13-...
greggarious 12y ago
One thing I am not clear on: Will Apple make ApplePay available to Android users? If they do, they would get more sales. More people wielding compatible phones would also drive adoption. (Think of how Discover used to be made fun of on Family Guy, but now almost everywhere will take it) I personally think that will be the tipping point to getting a critical mass of users - making sure it's cross platform.

184 points by johndbeatty 12y ago

One reason Apple Pay matters for developers and startups is it erodes a key advantage of leaders and incumbents. By dramatically reducing the friction around account creation and payments, Apple Pay makes it much, much easier for consumers to try new services. Ride sharing services, for example, could benefit from this. Of course, it will take a while for the effects to be felt, but increased competition in commerce is a positive long term implication of Apple Pay.

XorNot 12y ago
It really doesn't do this. Apple Pay is not the solution to moving money between parties who aren't registered merchants, with the relevant banking setup. Anyone can be become a merchant with a PayPass reader today. Apple Pay is not changing that, nor can it since that sector is entirely dependent on local commerce/finance laws and payment processor anti-fraud costs.
- panabee 12y ago
  Apple Pay is focused on easing consumer pain and friction, leading to more competition among service providers and retailers since trying new services will become easier for users.
  - XorNot 12y ago
    Ok now I'm not sure which aspect you're talking about. Because in the physical world the friction is not "oh I need a card" it's physically getting the customer in the door. Otherwise, what's involved is needing merchants to have NFC readers. This might be an exciting new thing in the US, but certainly in my neck of the woods NFC has near universal penetration. In the virtual world...this problem has been solved over and over and over. I'd argue it would be very surprising to see Apple displace Paypal. Everyone has Paypal - very few people (relatively) will have ApplePay.
    - aianus 12y ago
      > Everyone has Paypal - very few people (relatively) will have ApplePay. Today Paypal has something like 150 million users worldwide while there are 72 million iPhone users in the United States alone. Presumably all of these people will eventually upgrade to an iPhone supporting ApplePay.
      - XorNot 12y ago
        That is a big assumption. Phones have been getting a longer and longer tail. Moreover, there's almost certainly >50% overlap between iPhone user/Paypal user/other service user.
- ThrustVectoring 12y ago
  Apple Pay makes developers able to pay merchants on behalf of their customers without becoming a credit card processing middleman.
- rtpg 12y ago
  Having first-class OS support for the payment method (and the fact that a huge amount of people have been forced to register a credit card through iTunes at one point or another) means that the consumer barrier to entry is super low.
  - simonh 12y ago
    > forced to register a credit card through iTunes I'll never forget the day they held a gun to my head and made me buy my first iPod. Just so I get the terminology right though, when you register a card within itunes Apple is forcing you to do so, but when you register it with Google Play, Google is reluctantly allowing you to do it. Did I get that right?
    - rtpg 12y ago
      In some countries there have been periods where the only way to make an iTunes account (and thus get access to app store) was through registering a credit card or buying an itunes gift card. Google Play does not ask for a credit card unless you actually make a purchase.

aapl_bad_stream 12y ago

Pay? What about paying for decent streaming. The keynote was a more like a bum note.

Schweigi 12y ago

Apple Pay uses industry-standard EMV contactless protocols over NFC (and MSD contactless for backward compatibility). This makes it compatible with a wide range of contactless payment terminals in deployment today. So if the last section of the article is correct that means ApplePay will be compatible with Mastercard PayPass terminals? If this is true it would be really easy to roll out ApplePay as for example in Switzerland most terminals are PayPass ready.

johndbeatty 12y ago
Apple Pay is very standards compliant and the networks are very global. So I wouldn't be surprised.
- iancarroll 12y ago
  This is also great for us Android/GWallet/Isis/Softcard users, as more merchants will want EMV and have it implemented.
ThrustVectoring 12y ago
As far as hardware goes, yes - the same antenna you use for talking with a MasterCard can get used for talking to a smartphone. However, POS software is not at all standardized. You'd likely end up rolling out support for one POS platform at a time. They'll have the hardware you need to support ApplePay, but the rest of the work is probably tricky. tl;dr POS software systems that accept PayPass can change their software to accept ApplePay.
- ChrisClark 12y ago
  That sounds different than Google Wallet. With an NFC Android phone you can pay at any PayPass terminal, without them needing to change their software.
  - ThrustVectoring 12y ago
    I will admit that I might be completely wrong about the technical requirements for this. I'm sure that at least the hardware will support it, and from what I understand there may be a difference in how the terminal goes from talking with a payment method to a verified payment.

apple_suxor 12y ago

I can haz reliable streaming of my keynote now?

3JPLW 12y ago

> com.apple.WebKit.Networking.xpc wants to sign using key "Apple ID Authentication …" in your keychain. Do you want to allow access to this item? http://imgur.com/n3Ay8Ik http://imgur.com/n3Ay8Ik What is this? I've never seen this before. Loading (and reloading) pages from this domain prompts this popup.

astrange 12y ago
That would be SSL Client Certificates!

induscreep 12y ago

How does Apple pay differ from Google's ecosystem and whatever it provides? There, the smartphone app (Google Wallet vs passbook) and the hardware is not made by the same people (Samsung vs Apple) - so does this pose any problems?

natrius 12y ago
Apple Pay gets a token from your card issuer and uses that to pay. Google Wallet pays with their own card and charges your card the same amount. Only difference I see is that Google knows about every transaction you make. Apple doesn't.
- stephenr 12y ago
  Wow that's creepy and yet completely unsurprising from google..
  - damian2000 12y ago
    That data is fed into their Google Now servers, so that it can predict your buying patterns, hence offer you contextual adverts just as you're planning to buy something. /joking
- induscreep 12y ago
  Well...TIL. Is there any good resource to learn about the technical side of how payments are processed, and this new tokenization/network-level tokenization effort (http://clover-developers.blogspot.com/2014/09/apple-pay.html http://clover-developers.blogspot.com/2014/09/apple-pay.html)?

itry 12y ago

So we want to make payments via our phones. My first thought would be to create a protocol for this. Instead we get ApplePay and GoogleWallet and whatnot. If the internet was invented today, we would have AppleMail instead of email and GoogleTrans instead of http.

pbreit 12y ago

I haven't seen yet how (or if) recurring payments are supported. Anyone know?

redstar504 12y ago
See page 5 of this document for evidence that recurring payments are indeed supported. https://developer.apple.com/apple-pay/Getting-Started-with-Apple-Pay.pdf https://developer.apple.com/apple-pay/Getting-Started-with-A...

tonyb 12y ago

The part I'm not quite following is when the tokenization takes place. If it takes place per transaction then the PAN must be saved in the phone somewhere and the phone would have to be online to do the tokenization in real-time. If it is a one-time tokenization that happens when the card is added isn't that token just as valulable as the PAN since the token can be used across merchants? Maybe the 3-D secure piece of the puzzle protects the token but I think this still means the phone has to be on-line to use the NFC payment feature.

debt 12y ago
I would think compromise of the token, while bad, is way less bad than compromise of the PAN. I would think it's much easier to regenerate the one-time token than to create a new PAN.
- iknowthisstuff 12y ago
  The token seems to be generated randomly (per transaction) in the Secure Element. See my above post.
  - tonyb 12y ago
    I don't think that is quite correct. There is per-transaction stuff going on but it isn't being tokenized for every transaction. The token is stored in the secure element but is generated by the Token Service Provider (for example Visa Token Service). After reading the EVM token spec linked in the post[1] and the developer guide I think I'm able to answer my own question. The card is only tokenized once (or at least not per-transaction). For in-app purchases it is using 3-D Secure and for NFC is it using EMV, both of which provide some per-transaction security. Unlike a standard card the token will only work with 3-D Secure or EMV. For example a standard Chip&Pin card could still have it's mag-strip data extracted by a malicious POS system and used at a merchant that only uses magstripe terminals. With Apple Pay (and any other network token based system) a copied token would be worthless because it can't be used at a magstripe terminal. Basically the phone is acting both as an automated 3-D secure checkout (it is processed by the processors just like 3-D secure but the authentication process is automated) and as a contactless EMV card without the downside of also having a magstrip with the PAN on it. [1]http://www.emvco.com/specifications.aspx?id=263 http://www.emvco.com/specifications.aspx?id=263

21echoes 12y ago

> Apple Pay marks the first time a popular operating system is making payments a platform service for real-world, non-digital-good transactions, in a broad, inclusive manner that is compatible with the mainstream payments processing industry I'm sorry... what? How is this different from Google making Google Wallet back in 2011? They both use the same tech (PayPass, an industry standard), and both are made by an OS company.

gress 12y ago
Google wallet was unpopular and was impeded by the cell carriers. It was a business failure, not a technical one.
- 21echoes 12y ago
  Sure, I totally agree that Google Wallet was basically a business failure. I'd also say that the only thing that may stop Apple Pay from being a business failure is that it's Apple doing it this time (even tho, frankly, their UI looks significantly worse than Google Wallet, and has far less functionality, and Google Wallet is no longer impeded by the carriers)... But that's not what the article section i quoted was talking about. It just made an unqualified claim "this is the first time an OS maker has made a payments product for the physical world"
  - GuiA 12y ago
    I've never used Google wallet- but how could Apple's UI be worse? All you do is tap your device. How did Google Wallet work?
    - rstupek 12y ago
      Yeah I found that to be mildly humorous. Not sure how the UI is terrible, it looks pretty simple and well thought out
    - 21echoes 12y ago
      that's the payment experience, sure, but there's all those moments before and after your payment. say, adding a card, managing which cards you want to use at which locations, etc. there was plenty of footage in the live stream this morning, or stills here: http://www.apple.com/apple-pay/ http://www.apple.com/apple-pay/ but the bigger point: you're quibbling over the first of three points i made in an aside (the other two being that google wallet has way more features, and that google wallet is now not blocked from being on Verizon et al). The larger point is that the article saying that this is the first OS to have a payments solution is... very strange.

cdnsteve 12y ago

Maybe it's just me but I'm not drinking the kool aid about Apple Pay in today's announcement. Aside, I really hated the fact that to watch the event you had to use a Safari browser, same with watching Swift tutorial videos on their website, using latest Chrome on a Mac... Maybe I'm old school but I'm actually finding that payment options are getting worse, not better. This is another example of further fragmentation. Tap cards, stripe cards, chip cards - all the machines have different interfaces, some touch screen, some with pens. Not sure about you guys but I forget my credit card pin compared to my bank card pin half the time. I have a way to many accounts to remember already. What happened to just a signature? It's like someone needs to come up with an interface for payments. That universally accepted. Think of a wall socket for power, 3 prongs, supports 2 prong interface. Works great. Lets step back. Oh wait, we have one. It's called CASH. Cash seems to make more and more sense these days. No overage fees for using your own money. Accepted everywhere already. It doesn't get malware and steals your data. It doesn't need charging or have bugs. Doesn't seems as easy to spend when you physically see it leaving your old school wallet. I for one won't ever use my phone for payments nor will I be looking to work on apps trying to convince others that its fairy land for payments and makes your life better because of revolutionary Apple marketing spiels. Virtual apps on the app stores, fine, I see it makes sense. Brick and mortar, I just don't see it.

GuiA 12y ago
The problem of capitalism is that all agents want (amongst other things) full vendor lock-in. Sadly that's been our general direction for the past 50 years in most aspects of life, and there seems to be little hope for reversing the machine in thr short term.
- innguest 12y ago
  That's not the "problem of capitalism", that's the problem with bad people that are power hungry and uninformed people that see absolution in centralized power. I'm very hopeful that we will be able to reverse this trend as I see decentralization efforts everywhere (internet to press, 3d printing to manufacturing, bitcoin to currency, blockchain to public ledger, photovoltaics for power, etc).

thinkling 12y ago

I'm very curious about the business side of ApplePay. Is Apple going to get some (miniscule) cut of every transaction performed? I.e. is this a new revenue stream for Apple?

kunaalarya 12y ago
they said in their faq that they won't be taking a cut. Either this is purely for improving the ecosystem, or they're getting a cut from banks for cutting down fraud.
- iknowthissuff2 12y ago
  The latter is most likely

gaius 12y ago

I assumed from the headline this would be about Apple's wage-suppressing scam.

bsaul 12y ago

A few counterpoints to having your phone used as a payment device : - it breaks more easily and wears out quicker than a card - you can't lend it to a friend to have him buy stuff for you ( i don't have a pass id iphone so maybe i'm wrong on this one) - it gets stolen more often because it has intrisic value ( and a big one for the iphone) - if it gets stolen, how are you going to call your bank to disable it ? Plus, retrieving fingerprints from a stolen iphone was demonstrated last year and seems pretty easy. Now that iphones will be used to pay, you can expect criminals to get very familiar with the technic very fast.

JakaJancar 12y ago
> - it gets stolen more often because it has intrisic value ( and a big one for the iphone) Not really, if you can't activate it. - if it gets stolen, how are you going to call your bank to disable it ? You'll go to icloud.com and deactivate it yourself.
jhgg 12y ago
>- it breaks more easily and wears out quicker than a card I don't know about you, but personally I use my phone far more all of my credit cards combined on a daily basis. Is pulling out my phone to process a transaction going to add additional ware to it? Probably not. It's most likely out already from me using it while waiting in line.
a_c_s 12y ago
It would be great if the HN crowd would stop critiquing things before learning how they work. - If your iPhone gets stolen then you deactivate it via Apple's existing Find My Phone feature. Deactivating your device will block payments but you won't have to talk to your bank nor will you have to get the cards themselves replaced. - You can use a password instead of the thumbprint to pay. So you could indeed lend your phone and password to somebody for them to buy things for you. Or you could just reimburse your friend for whatever they purchased. - People already have a working smartphone on their person at nearly all times, I don't see how "wearing out more easily" is much of a critique. Nobody is suggesting that once somebody starts using ApplePay they destroy the corresponding physical card.
12y ago

mrweasel 12y ago

The 3DSecure stuff gets a bit weird, do you still get redirected to you banks 3DSecure page? If so I don't see that working to well in at least some countries (I know Apple Pay is US only for now). In Denmark a large number of banks would present you with a Java applet on the 3DSecure page, that's not really going to work on the iPhone.

LeicaLatte 12y ago

eBay should have spun off PayPal when they had the chance. With this year's double blow of Amazon Payments and Apple Pay, their end seems near.

f3llowtraveler 12y ago

The future of payments is Bitcoin.

exelius 12y ago

I'm curious how much, if anything, Apple makes off of this. It's pretty clear they're not displacing anyone in the existing merchant payment value chain (which is the mistake most other companies have made) but it's not clear how Apple makes any money off of this. I have a hunch that Apple might not be making any money at all off of Apple Pay. Apple operates their business very differently than many tech companies. The vast majority of Apple's profit comes from the ridiculously high margins on their hardware. They develop services to increase the capability of the hardware platform; and any money resulting from the operation of those services is secondary. When Apple initially released the iTunes store, they operated it at a loss. The entire iTunes store and all the payment systems, etc. that go along with it were built in order to sell iPods. There's a very real possibility that Apple looked at the mobile payment market and said "Shit, there are way too many entrenched interests for us to insert ourselves in the value chain and take a cut. But having a superior mobile payment system will help us sell more iPhones, so we'll do it anyway." Those entrenched interests are what have kept every other mobile payment company from making a real dent in the overall payments ecosystem. Unlike with iTunes where Apple made demands about how the store had to function, they placated the industry while coming up with a solution that worked for both end users and the industry players. We'll see if it catches on, but I expect it will.

gambiting 12y ago
>>The vast majority of Apple's profit comes from the ridiculously high margins on their hardware. I am not saying you are wrong, but could we see a source for that please? I always assumed that no matter what they do, the profit margin on hardware cannot be THAT large, because the costs of R&D and marketing for apple devices must be huge(they ship with their own in-house developed operating system,after all), so I always assumed that Apple makes most money off platforms like iTunes, not hardware profits. I would be very happy to be proven wrong though.
- exelius 12y ago
  I don't have an explicit source; but we can back into the numbers. Apple only breaks out COGS for the entire company; not by division. But regardless, the iTunes division is dwarfed by the iPhone/iPad/Mac divisions. Apple's gross margins are right around 37.5% -- which is very high. The average for the computer/electronics industry is closer to 20%. If you look at historical trends through their past SEC filings, you'll see that margins have actually been declining, and that iTunes was only a significant percentage of revenue for the last couple of years. It was less than 1% of revenue before 2007, so it operated as a very small part of the company for the first 10 years of its existence. Online media direct sales are actually not as big of a business as you might think -- for example, Steam alone did more revenue than the entire online movie sales/rental business (not counting subscription services). As a percentage of revenue, Apple's operating expenses (which include R&D and the operation of the Apple stores, servers, etc.) are pretty low -- less than 10%. All of this info comes from Apple's 10-K: http://investor.apple.com/secfiling.cfm?filingID=1193125-13-416534&CIK=320193 http://investor.apple.com/secfiling.cfm?filingID=1193125-13-...

greggarious 12y ago

One thing I am not clear on: Will Apple make ApplePay available to Android users? If they do, they would get more sales. More people wielding compatible phones would also drive adoption. (Think of how Discover used to be made fun of on Family Guy, but now almost everywhere will take it) I personally think that will be the tipping point to getting a critical mass of users - making sure it's cross platform.