How Apple Pay Works: The Tech Behind

[David Matthews]

Apple Pay makes contactless payments feel effortless, but behind that two-second tap is a surprisingly sophisticated chain of cryptography, tokenization, and real-time authorization.

Read the full article here.

How Apple Pay Works: The Tech Behind

 

[hazphan]

Thanks for the article! I've heard one major expense from business owners is the cost of being able to accept credit cards (ie their bill to Visa, MasterCard, etc) for their goods. I wonder how much impact, if any, Apple/Google Pay have had on those merchant's fees. Or do the merchants pay directly to Apple/Google to be able to use the technology?

I love technology, but sometimes I wonder how we keep inventing more expensive ways to do something as simple as a transaction, and how that drives up costs for consumers!

 

[p51d007]

The bite of these tap to pay things is how much the banks STIFF the business to allow the transaction. Yeah, I know the computer servers cost money etc, but the amount that they
charge on EACH transaction is just another bank highway robbery.
It would be a PITA but it would be funny if EVERYONE went back to cash for just 30 days and see how much crying the banks would do.

 

[jbright]

The underrated part of Apple Pay is how much it reduced the damage from retailer breaches. Stores never actually seeing your real card number is one of those behind-the-scenes security upgrades most people benefit from without realizing it.

It also proved that convenience is the best security feature. People are far more likely to use biometrics and tokenized payments when it’s faster than fumbling around for a wallet.

 

[Axeia]

Thanks for the article! I've heard one major expense from business owners is the cost of being able to accept credit cards (ie their bill to Visa, MasterCard, etc) for their goods.

They're still involved, they still want their cut.

I wonder how much impact, if any, Apple/Google Pay have had on those merchant's fees. Or do the merchants pay directly to Apple/Google to be able to use the technology?

Trivial, there might have been small costs for them in having to upgrade their WiFi. They might have reduced their costs a little bit because there's less fraud due to actual creditcard number being used / the phone handling the ID etc. All very minor in the grand scheme of things

I love technology, but sometimes I wonder how we keep inventing more expensive ways to do something as simple as a transaction, and how that drives up costs for consumers!

Because green line must go up.
Once you start using it you're locked into the ecosystem a little bit tighter, you got your payment details set up to start spending in the App/Play stores where Apple & Google will happily take a fat margin themselves.

At a certain scale the thinking from the company perspective gets inverted from "What useful changes/features can we make to attract more customers" to "How can we extract more value out of every customer and perhaps take the effort to disguise it as something that benefits the customer".
Hence why smaller companies still do cool things that benefit you / make things better. But the big monopolies/duopolies just invent new ways to screw you over, both just different ways to make the green line go up.