Apple Pay: Transforming Mobile Payments - A Business Case Study(2014)

This case study examines Apple's 2014 announcement of Apple Pay, highlighting its innovative approach to transforming mobile payments through security, ease of use, and privacy. It details how Apple Pay leverages NFC technology, a Secure Element chip, and Touch ID on iPhone 6 and iPhone 6 Plus to enable secure transactions. The case study also discusses partnerships with major payment networks like American Express, MasterCard, and Visa, as well as key retailers. Apple Pay's unique Device Account Number system, which replaces actual card numbers with encrypted tokens, is emphasized as a core security feature. The study further explores the convenience of online shopping within apps using Touch ID and the availability of Apple Pay on the Apple Watch, extending its reach to a broader user base. The announcement underscores Apple's commitment to user privacy by not collecting purchase history and providing tools to suspend payments in case of lost or stolen devices.

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PRESS RELEASE
September 9, 2014
Apple Announces Apple
Pay
Transforming Mobile Payments with an Easy, Secure &
Private Way to Pay
CUPERTINO, California―September 9, 2014―Apple today announced
Apple Pay, a new category of service that will transform mobile payments
with an easy, secure and private way to pay. Apple Pay works with iPhone
6 and iPhone 6 Plus through a groundbreaking NFC antenna design, a
dedicated chip called the Secure Element, and the security and
convenience of Touch ID. Apple Pay is easy to set up, so hundreds of
millions of users can simply add their credit or debit card on file from their
iTunes Store account. Apple Pay will also work with the newly announced
Apple Watch, extending Apple Pay to over 200 million owners of iPhone 5,
iPhone 5c and iPhone 5s worldwide.
Apple Pay supports credit and debit cards from the three major payment
networks, American Express, MasterCard and Visa, issued by the most
popular banks including Bank of America, Capital One Bank, Chase, Citi
and Wells Fargo, representing 83 per cent of credit card purchase volume
in the US.* In addition to the 258 Apple retail stores in the US, some of the
nationʼs leading retailers that will support Apple Pay include
Bloomingdaleʼs, Disney Store and Walt Disney World Resort, Duane Reade,
Macyʼs, McDonaldʼs, Sephora, Staples, Subway, Walgreens and Whole
Foods Market. Apple Watch will also work at the over 220,000 merchant
locations across the US that have contactless payment enabled. Apple Pay
is also able to make purchases through apps in the App Store.
“Security and privacy is at the core of Apple Pay. When youʼre using Apple
Pay in a store, restaurant or other merchant, cashiers will no longer see
your name, credit card number or security code, helping to reduce the
potential for fraud,” said Eddy Cue, Appleʼs senior vice president of
Internet Software and Services. “Apple doesnʼt collect your purchase
history, so we donʼt know what you bought, where you bought it or how
much you paid for it. And if your iPhone is lost or stolen, you can use Find
My iPhone to quickly suspend payments from that device.”
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Apple Pay will change the way you pay. When you add a credit or debit
card with Apple Pay, the actual card numbers are not stored on the device
nor on Apple servers. Instead, a unique Device Account Number is
assigned, encrypted and securely stored in the Secure Element on your
iPhone or Apple Watch. Each transaction is authorised with a one-time
unique number using your Device Account Number and instead of using
the security code from the back of your card, Apple Pay creates a dynamic
security code to securely validate each transaction.
“JPMorgan Chase has been pleased to collaborate on Apple Pay to create
a better, faster and safer payments system, which puts the customer first,
creating an exceptional customer experience for consumers and
merchants. Everyone wins,” said Jamie Dimon, chairman and CEO,
JPMorgan Chase & Co.
“Weʼre providing our customers with tools to make their financial lives
better, including our 30 million digital banking customers,” said Brian
Moynihan, CEO of Bank of America. “For them, better means simple and
convenient. Apple Pay is another exciting move in that direction.”
“Apple Pay is the kind of innovative thinking that brings the worlds of
online and offline commerce closer together,” said Ken Chenault, CEO of
American Express. “Weʼre excited to work with Apple to offer Card
Members and merchants a simple and secure way to make purchases in
stores and on apps.”
Online shopping in apps with iPhone is also as simple as the touch of a
finger. Users can pay for physical goods and services including apparel,
electronics, health and beauty products, tickets and more with Touch ID.
Checkout can happen with a single touch, so thereʼs no need to manually
fill out lengthy account forms or repeatedly type in shipping and billing
information, and card details are kept private and are not shared with the
online merchant. For example, quickly order grill accessories for a
backyard BBQ from the Target app, easily request a ride with Uber without
having to create an account first or avoid the lunch line by using Rapid
Pick-Up and paying ahead in the Panera Bread app. Simply make your
selection and when ready to buy, use Apple Pay to complete the
transaction.
Starting in October, with iPhone 6 and iPhone 6 Plus, Apple Pay will be
available in the US as a free update to iOS 8. Apple Pay will work in stores
with iPhone 6, iPhone 6 Plus and Apple Watch. Apple Pay APIs will be
available to developers in iOS 8 so they can enable purchasing physical
goods within their apps on iPhone 6 and iPhone 6 Plus.
* American Express, Bank of America, Capital One Bank, Chase, Citi and
Wells Fargo at availability with additional banks coming quickly thereafter
including Barclaycard, Navy Federal Credit Union, PNC Bank, USAA and
U.S. Bank.
Apple designs Macs, the best personal computers in the world, along with
OS X, iLife, iWork and professional software. Apple leads the digital music
revolution with its iPods and iTunes online store. Apple has reinvented the
mobile phone with its revolutionary iPhone and App Store, and is defining
the future of mobile media and computing devices with iPad.

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Press Contact:
Adam Howorth
Apple
[e-mail]
020 7184 1202
© 2014 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS, Macintosh, Apple Pay,
iPhone, Touch ID, iTunes Store, Apple Watch and App Store are trademarks of Apple. Other
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