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Apple reportedly wants music labels to lower the $10/month rate for Beats Music
Peter Kafka of Re/Code reports that Apple may be actively trying to convince music labels to lower the somewhat-standard US$10/month fee that Beats Music charges for its streaming music service. Sources say Apple is talking to the big music labels about a new set of rights and features it would like to include in a revamped version of the Beats Music service it bought earlier this year. Among the things Apple wants is a new pricing structure that would allow it to sell the service for less than the $10 level it's at now. If Apple is somehow able to leverage its reported 885 million iTunes accounts on file to secure a lower monthly rate for Beats, it would certainly represent a huge setback for Spotify, not to mention a huge boon for music lovers. Note that if Apple is able to convince just 1.13% of iOS users to sign up for a music subscription, it will already have more paying subscribers than Spotify has (~10 million). Just as important, a lower subscription rate might convince a sizable percentage of loyal Spotify fans to jump ship while, at the same time, help entice streaming newbies to give Beats Music a spin. While it's safe to assume that music labels aren't exactly keen on playing ball by Apple's rules, album sales hit a record low last month and Apple arguably has more leverage now than ever before. It'll certainly be interesting to see how this one plays out once Apple's plans for Beats Music becomes more apparent. As for what type of new features Apple might want to implement in Beats Music, well that's anybody's guess. One feature I hope Apple considers would be the ability to quickly send a friend -- via email or text -- a clickable link of a song you're listening to. So instead of telling or texting a friend that they should check out a particular song whenever they might get the chance, you could just send them a link to check out at their own convenience.
Bill Gates: Apple Pay is "fantastic" and a "real contribution"
Bill Gates yesterday sat down for an insightful interview with Erik Schatzker of Bloomberg where the Microsoft co-founder discussed, amongst other topics, his efforts to leverage the ubiquity of cellphones to help bring affordable and digital banking options to the world's poorest countries. Midway through the interview, the topic turned briefly to Apple Pay, Apple's upcoming mobile payments platform. Gates had positive things to say about Apple Pay, calling it a "real contribution." Well, Apple Pay's a great example of how a cell phone that identifies its user in a pretty strong way lets you make a transaction that should be very, very inexpensive. So the fact that in any application I can buy something, that's fantastic. The fact I don't need a physical card anymore, I just do that transaction and you're going to be quite sure about who it is on the other end, that is a real contribution. Gates further added that it's only a matter of time before similar functionality becomes available across all mobile platforms. And all the platforms, whether it's Apple's or Google's or Microsoft, you'll see this payment capability get built in. That's built on industry standard protocols, NFC. And these companies have all participated in getting those going. Apple will help make sure it gets to critical mass for all the devices. As we noted yesterday, the broad mechanisms that govern Apple Pay aren't built on proprietary Apple technologies. Rather, Apple Pay adheres to an emerging industry standard regarding token-based mobile payments and, as a result, there's nothing to prevent companies like Google and Microsoft from implementing similarly secure mobile payment platforms of their own in the near future. The full Gates interview can be viewed below: via Business Insider
Apple Pay: An in-depth look at what's behind the secure payment system
With Apple Pay slated to go live later this month, one can soon expect to see an avalanche of fear mongering from pundits who, like PayPal, will question the wisdom of trusting Apple with user credit card information. The reality, though, is that Apple Pay is an exceedingly secure mobile payment platform. In fact, it may very well be the safest way to make any type of credit card payment. To understand why, below is a general overview of how the system works behinds the scenes. Note that this article is meant to paint the Apple Pay process in broad strokes, as a good portion of the nitty-gritty technical details aren't yet publicly known and, due to security considerations, may never be fully disclosed. In putting this post together, I was able to talk to a few individuals involved with the development of Apple Pay who were able to shed a tiny bit of light on Apple's foray into the world of mobile payments. Additionally, a number of the technical aspects of the financial and logistical processes that govern Apple Pay can be gleaned from the EMV Payment Tokenisation Specification Technical Framework which can be downloaded here. That said, here's how Apple Pay operates and why it's so secure. Credit Card information isn't part of the equation With Apple Pay, no credit card data -- even in encrypted form -- is ever stored on the iPhone or on Apple's servers. Similarly, no credit card data is ever transmitted to or stored on a merchant's servers. When a user first signs up for Apple Pay, either via an existing iTunes credit card or by loading a new one onto the iPhone, the card information is immediately encrypted and securely sent to the appropriate credit card network. Upon determining that the credit card account is valid, a token is sent back down to the device whereupon it's safely stored within the iPhone's Secure Element. The token is used in place of an actual credit card number and is what Apple, in its marketing materials, refers to as a unique Device Account Number. What the heck is a token? The token itself, as implemented in Apple Pay, is a randomly generated and unique 16-digit number that ostensibly resembles a valid credit card number but is, in fact, fundamentally useless. Think of the token as nothing more than a placeholder or reference ticket for your actual credit card information. The only thing a token has in common with its corresponding credit card number are the last 4 digits on the card. A 2012 white paper from First Data on the benefits of tokenization reads: The token can be used just like the original card number for business functions such as returns, sales reports, marketing analysis, recurring payments, and so on, but cannot be used to conduct a fraudulent transaction outside the merchant environment. The aim of tokenization is to remove the card information from the merchant environment as completely and quickly as possible (thus addressing the root cause of data security issues) while maintaining existing business processes. Tokens by themselves are worthless and cannot be decrypted The key thing to remember about tokens is that they hold no intrinsic value and cannot be used, by themselves, to perform any type of monetary transaction. Over and above that, it's likely that Apple Pay tokens are not mathematically generated, which is to say that they can't be decrypted back into a credit card number because encryption isn't even part of the equation. Put differently, there exists no master key to reverse engineer them. Instead, there's what is effectively a master index. When a credit card is loaded into Apple Pay, the credit card data is replaced with a randomly generated string that only the token issuer (in this case the credit card networks) can map back to the credit card account. You could hand the most talented hackers or cryptographers a list of millions of token numbers and it would be of no value to them. As an additional layer of security, there are mechanisms in place to ensure that the token itself is bound to the phone on which it's stored and can never be used from another device. The mechanics of an Apple Pay transaction Once a transaction is underway, the iPhone sends the token (which again, acts as a stand-in for the real credit card information) to the merchant which, in turn, sends it to the credit card network where it is mapped back to the corresponding credit card account that created it. The card network ultimately contacts the issuing bank for authorization. If the card is approved, the issuing bank sends a message all the way back down the line to the merchant indicating that all systems are go and the transaction can proceed. This process is leaps and bounds safer than traditional credit card terminals because merchants transact exclusively in tokens and are never in possession of user credit card information. With a service like Apple Pay in use, large credit card breaches at companies like Target and Home Depot become ancient history because there are no credit card numbers to steal in the first place. What's more, Apple Pay's use of tokens eliminates common threats such as man in the middle attacks and good ole' fashioned credit card skimming because, again, actual credit card information never touches the merchant. The use of a token, though, is just one part of the puzzle that makes Apple Pay so secure. Additional layers of security - Touch ID and cryptograms Per the aforementioned EMV Payment Tokenisation Specification, completing a token-based transaction from a mobile device requires a form of personal authentication, which is where the simplicity of Touch ID rears its beautiful head. Instead of having to clumsily enter in a one-time password (static authentication data such as a PIN cannot be used), the payment process is finalized when a user authorizes it with Touch ID. But there's a whole lot more to Apple Pay than Touch ID and the simple handing off of tokens. Providing an additional layer of security, an Apple Pay-equipped iPhone at the time of each transaction also sends a dynamically generated CVV up the chain along with a cryptogram. The CVV is the three-digit string located on the back of your credit card and, in the case of Apple Pay, is a algorithmically-generated dynamic string that's tied directly to the token. The cryptogram itself "uniquely identifies the device" that created the token and, according to the EMV Payment Spec, is likely comprised of encrypted data sourced from the token, the device itself, and transaction data. Note, though, that the precise components of the Apple Pay cryptogram aren't publicly known. The important thing to remember, though, is that the cryptogram is effectively a one-time use digital signature that verifies that the token in transit originated from the device being used. Additionally, the cryptogram includes pertinent transaction data such as the identity of the merchant and how much is being charged. There are two important facts here to remember: Tokens cannot be used without an accompanying cryptogram The cryptogram ensures that a token can only be used from the device on which it was initially loaded Fleshing this out a bit more, I spoke to Steve Mott of BetterBuyDesign -- a former MasterCard executive who now writes for Digital Transactions -- who added the following details: The network 'unravels' the cryptogram, then ships the transaction information to the issuer for authorization. The key is the merchant sees NO account information but has the final four digits of the PAN [CC number] as an account identifier to use as a mechanism for tracking volume/activity per account. The only dynamic part of the token is the cryptogram, generated per transaction; the rest is static token data, but largely worthless without the cryptogram. Apple Pay will help usher in a new standard for mobile payment security Highlighting the improved safety that Apple Pay provides, Tom Noyes -- a former credit card executive who has an excellent series of in-depth posts about the world of mobile payments -- said the following in the wake of Apple's Apple Pay announcement. Apple is the first implementation of the new EMVCo tokenization specification. In my view this is a giant LEAP beyond EMV chip and PIN, and is now (by far) the most secure PAYMENTS scheme on the planet. Mott was similarly excited about the prospect of Apple Pay, noting that while it remains to be seen how well the service scales, Apple "raised the bar and made transacting without a token no longer an option." Noyes' statement brings up an interesting point, namely that the fundamental aspects of Apple Pay weren't concocted in Cupertino. Rather, Apple Pay was designed in accordance with an emerging token-based mobile payments standard which aims to increase security and reduce the incidence of fraud. To that end, Apple is getting into the mobile payments space at just the right time. So while Apple isn't necessarily inventing the wheel here, Apple Pay again represents the first real implementation, on a massive scale no less, of the relatively fresh tokenization specification. That said, it's not as if Apple took the easy way out and simply developed Apple Pay to conform to the most general requirements for token-based transactions. On the contrary, sources at two top credit card companies who helped work on the implementation of Apple Pay told me that large technical teams from Apple, credit card companies, and banking institutions worked tirelessly over the past few months to implement additional layers of security into the Apple Pay platform. This jibes with recent reports detailing the immense effort put into the platform from the likes of Visa and JP Morgan Chase. A credit card executive involved with development of Apple Pay told me: Token transactions as they have been implemented for Apple are a new and much higher standard of security for electronic payments. The amount of security built into provisioning tokens and supporting transactions is a new standard that I think will definitely shift fraud patterns going forward. What this means for consumers While it remains to be seen if Apple Pay catches on with consumers, there should be no doubt that Apple Pay is an extremely safe way to make a credit card payment. In fact, it's likely much safer than how most users are currently making credit card payments today. Remember that merchants in an Apple Pay transaction never have access to user credit card information and, as a result, users never have to worry about their information being compromised in a security breach. Further, security at the device level is effectively impenetrable as tokens, along with the encrypted keys responsible for the cryptogram, are all securely stored in the Secure Element. And as an extra security precaution, iPhone owners will have the ability to unlink or temporarily suspend a token connected to a stolen device, thereby rendering Apple Pay inoperable until the device is retrieved. So while the Apple Pay user experience has been set up to be impressively simple, there are a myriad of complex safety measures at work behind the scenes to help ensure that sensitive user data remains free from prying eyes. The use of token-based payments is something the banks have been pushing for and something the credit card networks are similarly excited for. The only variable, really, is how consumers take to it. Safety, though, shouldn't be a concern.
PayPal reportedly axed from Apple Pay due to its partnership with Samsung
When Apple announced Apple Pay earlier this month, PayPal was conspicuously absent from Apple's list of secured partnerships. Now comes word via Ian Kar of BankInnovation that PayPal was initially part of Apple's vision of Apple Pay, but that negotiations fell apart due to Pay Pal's relationship with Samsung. Apple and PayPal started talking early on in Apple's development of Apple Pay, as Apple was setting up partnerships with the card issuing banks and card networks. Since PayPal's a payments industry leader, it would have been shortsighted for Apple to not reach out to PayPal. But while these talks were going on, PayPal went ahead and partnered with Samsung on the Galaxy S5 fingerprint scanner, a move that was reportedly forced onto PayPal by eBay CEO John Donahoe. PayPal's now-former president David Marcus was purportedly categorically against the Samsung deal, knowing that it would jeopardize PayPal's relationship with Apple. Donahoe won the day, however. The Galaxy S5 was originally unveiled in February of 2014, right around the same time Apple reportedly started making inroads on securing Apple Pay partners. Karr adds that Apple was furious to learn of the PayPal/Samsung partnership and effectively kicked PayPal to the curb. What's also interesting is the claim that eBay forced PayPal folks into the Samsung deal, especially in light of today's news that eBay will be spinning off PayPal into a separate publicly traded company. Reports of an Apple/PayPal fallout also helps explain PayPal's somewhat bizarre and baseless jab at Apple Pay security a few weeks ago. Apple Pay isn't yet live, but is expected to go operational sometime in mid-to-late October. Early hands-on reviews of the service, however, have been overwhelmingly positive.
Jack Dorsey: New Square register will accept both Apple Pay and Bitcoin
Apple Pay won't be active until sometime next month, but companies in the payment space are already reacting to the newest kid on the block. Some, like PayPal, have resorted to fear-mongering. Others, like Square, are making adjustments to welcome Apple's new mobile payments platform with open arms. Originally reported by Andrea Bellemare of CBCNews and subsequently relayed by Wired, Square CEO Jack Dorsey has said that Square is planning on building a register capable of handling Apple Pay payments. And in an effort to make sure all the boxes are checked, Square's new register will also accept BitCoin payments. "We're building a register so that sellers can accept a credit card, so they can accept cash, so they can accept a cheque, so they can accept Bitcoin and so they can accept any form of payment that comes across the counter including future ones and burgeoning ones like Apple Pay," Dorsey told the CBC this week, speaking at the opening of Square's new Canadian offices in Kitchener, Ontario. This certainly seems like a smart approach. Assuming that Apple Pay is bound to become a common method of payment, it's a good move for Square to be prepared ahead of time. About two weeks ago, Dorsey said that Apple Pay doesn't pose a threat to Square's business as the two platforms provide different services. It's not a threat because ... we don't build a credit card, we don't build a payment device at all. They're building something that allows a credit card to be used in another place, but they're not building a terminal. We are a terminal, we a register and we accept payments, so there's no threat, there's no competition there at all.
Square's new cash register will take Bitcoin, Apple Pay and much more
Every now and again, a conspiracy theorist will tell us that the illuminati will abandon national currencies in favor of a single, worldwide form of payment. Given the myriad ways that we currently use to empty our bank account, we're not sure how a single, all-purpose payment system would be a bad thing. That's why Square is hoping to aid our plight by building a new cash register that'll accept as many new-fangled forms of payment as possible, including Bitcoin and Apple Pay. In an interview with CBC, CEO Jack Dorsey said that he hopes Square's new hardware will take "any form of payment that comes across the counter," before mentioning the cryptocurrency and Apple's new commerce platform by name. When asked if he was concerned about Apple taking his business, the executive responded that since the iPhone maker isn't building a terminal (i.e. a cash register), there's no threat to Square's immediate future. There's no word on when exactly this new swiss army knife of buying will start appearing in small businesses across the country, but we doubt it'll be long before you can buy coffee with Bitcoin without having to use a third-party exchange.
Tim Cook and Charlie Rose talk Apple and Privacy in second interview
The full video from the second part of Charlie Rose's interview with Tim Cook has not been posted online yet, but a clip has been made available of the Apple CEO discussing the privacy of Apple users. In the clip, Cook criticizes rival Google for selling user information to companies, emphasizing that Apple wants to sell phones, not your personal information. The interview also addresses the new Apple Pay system, and how it ties into the company's long term goals for selling more hardware. You can view the clip below.
The iPhone 6 has NFC, but not really
The iPhone 6 and 6 Plus definitely have NFC functionality, as was confirmed on-stage during the presentation of Apple Pay, but when it comes to using the chip for anything other than Apple's own payment system, it really doesn't have near-field capabilities. As Cult of Mac confirmed with Apple, the NFC feature on Apple's new phones will only be used with Apple Pay, and developers won't have access to the feature for their own apps. This of course could change in the future, just as Touch ID will soon be opened for developers to utilize the ID verification feature in their own software, but at the moment it is indeed being locked down. Apple's relationship with NFC has been a long and complicated one. In short, the company has taken heat year after year from a small number of vocal critics to bemoan its refusal to embrace the technology, while at the same time Apple has shown consistently that it really didn't need to do so. Had Apple included NFC early on, especially for some type of payment system, it would likely have aided competitors (namely Android manufacturers) by giving retailers more reason to include NFC payment kiosks in their stores. Apple Pay is sort of a workaround, so it's not entirely surprising that third parties won't have access to the hardware functionality right from the start.
PayPal ad subtly criticizes Apple's security ahead of Apple Pay launch
PayPal is on the offensive, subtly attempting to discredit Apple's security ahead of the launch of the the company's recently announced Apple Pay mobile payment service. As noticed by Pando Daily, the full page ad appears in the The New York Times and hints at the recent celebrity selfie leak that initially was blamed on iCloud. The ad proclaims "We the people want our money safer than our selfies," with the tagline "PayPal protecting the people economy." Apple is preparing to launch its mobile payment service in October and will allow iPhone 6 and 6 Plus owners to use their phone to make payments at participating retailers. The service uses NFC for communication with point of sale units and Touch ID for security. Privacy, security and Apple Pay are hot topics with CEO Tim Cook appearing recently on the Charlie Rose show to talk about those issues and a wide variety of other topics.
Apple will reportedly receive .15% from all Apple Pay transactions
The Financial Times is reporting that Apple will receive a small percentage from each transaction consumers complete with Apple Pay, the company's recently announced mobile payment platform. So more than just a means to drive iPhone sales, Apple Pay will also serve to pad Apple's bottom line. But such is the sway of the tech company that JPMorgan, Visa and the other banks and payments networks sent senior executives to Mr Cook's presentation on Tuesday to pay homage. Bank chief executives fawned about the "exceptional customer experience" and the "exciting move". They are also paying hard cash for the privilege of being involved: 15 cents of a $100 purchase will go to the iPhone maker, according to two people familiar with the terms of the agreement, which are not public. That is an unprecedented deal, giving Apple a share of the payments' economics that rivals such as Google do not get for their services. That's certainly an interesting tidbit, but don't expect Apple Pay to be a huge money maker early on. For starters, the feature will only work on new iPhone 6 models. Second, the 220,000 merchant locations that will support Apple Pay at launch belies just how big the credit-based economy in the U.S. is. To wit, the Wall Street Journal last week, citing the Electronic Transactions Association, relayed that there are "more than nine million U.S. merchants" who currently accept credit and debit cards. In other words, 220,000 merchant locations is a good start, but there remains a long list of merchants Apple will have to convince to get on board sometime down the road. The good news for Apple is that all merchants are being forced to upgrade their POS terminals by October 2015 with EMV support. Pando Daily adds: EVM cards are read at the point of sale by inserting the end of the card featuring the chip into a payment terminal, rather than swiping the familiar magnetic stripe on the back of the card. Consumers then enter a PIN to authorize the transaction. (If you've traveled internationally, you're likely familiar with this system). These EMV cards and the resulting transactions are far more difficult to counterfeit than what Americans consider "standard" credit cards. While EMV is the norm around the world, only about 14 percent of US merchants support this technology today and very few consumers own credit cards incorporating these chips. So when merchants inevitably start upgrading their terminals to comply with what is effectively a government mandate, it stands to reason that a good number will opt for terminals that support NFC payments.
Georgetown law professor says Apple may now be a regulated financial institution
The potential of Apple Pay has ignited excitement amongst iOS fans since its announcement, but is Apple opening itself up to more regulation with the business expansion? Georgetown law professor Adam Levitin, a specialist in financial regulation, suggests that the company may have just accidentally become a regulated financial institution thanks to the move. In a new post on the Credit Slips blog, Levitin lays out his legal argument that Apple Pay may be more complicated for the company than they initially anticipated. Levitin's argument centers around the Consumer Financial Protection Act under which Apple may be considered a "service provider", and thus be subject to the regulations that go along with that title. I think there's a reasonable case that Apple is a "service provider" by virtue of Apple Pay. A "service provider" must provide "a material service to a covered person in connection with the offering or provision by such covered person of a consumer financial product or service". Card issuers are covered persons, and Apple is providing a material service in connection with a consumer financial product--a credit card. Levitin explains that since Apple is operating the payment system they will be held to the same standards as a company with a consumer financial product like a credit card. The "service provider" definition explicitly includes those anyone who "participates in designing, operating, or maintaining the consumer financial product or service". There's an argument that Apple participates in designing, operating, and maintaining the card payments that go through Apple Pay, especially as Apple has specific agreements with card networks about what data is transmitted, what format, etc. In other words, Apple isn't just being a common carrier transmitting data for anyone. It's involved in figuring out what to transmit. The "service provider" definition also explicitly includes anyone who "processes transactions relating to the consumer financial product or service". That sure sounds like Apple's role in the Apple Pay environment. There is a carve-out to this particular illustrative inclusion for parties that "unknowingly or incidentally transmitting or processing financial data in a manner that such data is undifferentiated from other types of data of the same form as the person transmits or processes". It's important to note that Levitin does not anticipate the CFPB actually examining Apple in the near future thanks to the amount of oversight they're responsible for and their limited budget. He also explains that possible technical details in how the Apple Pay service works will keep the company from facing this increased regulation. There are few issues with his analysis. First of all Apple isn't storing any data on the devices. The deals they've worked out with the banks have allowed them to process payments without having the full card number stored on the device. In a sense Apple is bridge a gap between bank and consumer rather than running the card themselves, even if they're receiving a percentage of each sale. Also, similar payment system providers like Paypal or Square aren't subject to this sort of financial regulation. Other than its size, what sets Apple apart from these competitors? Regardless of the questions it raises, Levitin's article is an interesting look at the possible complications that could arise from Apple's latest venture. It's hard to imagine a world where Apple's lawyers wouldn't have already figured out a way around this before they announced the service, but you can never tell exactly what will happen when it comes to regulation. You can read all of Levitin's piece here.
NYT details how Apple and the nation's top banks created Apple Pay in complete secrecy
Apple's effort to create a mobile payment system -- now known as Apple Pay -- truly began to pick up steam during the Summer 2013, according to the New York Times which yesterday published a fascinating account of the service's development over the last 12 months. While many mobile payment start-ups are often intent on bypassing established players in the payments space, the Times relays that Apple's willingness to work with traditional financial institutions was welcomed by participating banks and is perhaps why Apple was able to receive favorable rates in the process. While the Apple Pay process itself is relatively simple -- hold up your iPhone to a payment pad and verify your identity with Touch ID -- the work done behind the scenes was complex, required a tremendous amount of resources, and in typical Apple fashion, was kept as hush-hush as possible. From the beginning, the project was top secret, with what one person involved called a "code name frenzy." The card companies had code names for Apple and Apple for the card companies. At Visa, the code name was another consumer electronics company, chosen to avert attention from employees who were not involved. Visa soon had about a thousand people on the team. ... JPMorgan, the largest card issuer in the country, set up a war room in a windowless conference room in San Francisco, where the most sensitive work was done. Only about 100 of the 300 JPMorgan employees working on the project knew that it was a partnership with Apple. Interestingly enough, Apple's banking partners were completely in the dark as to what the payment service would even be called until Tim Cook mentioned the name on-stage this past Tuesday. Apple Pay is slated to go live in October 2014 and it'll be interesting to see how quickly the service catches on with consumers, if at all. While we'll know the answer to that relatively soon, early impressions of the service have been overwhelmingly positive. Of course, the more merchants Apple can get on board the greater the odds of success. In a press release touting the impending arrival of Apple Pay, Apple indicated that 220,000 merchant locations will support the service at launch. On a related note, the Times relays that two of the country's biggest retail chains -- Walmart and Best Buy -- will not be supporting Apple Pay this fall. The entire Times article is replete with behind the scenes info and is well worth a read.
Apple Pay could make everyone's mobile wallet purchases cheaper
Have you stopped to consider what impact Apple Pay will have on the credit card industry? Don't worry, we hadn't either, but Bank Innovation believe that the service might just send mobile payments mainstream. Currently, tapping your phone on a reader incurs a transaction fee of 2.75 percent, far higher than the 1.5 percent that's imposed when you swipe a card. Because the issuing bank's card isn't there, there's a greater risk of fraud that banks multinational financial services corporations like Visa and MasterCard then have to shoulder. According to the report, however, the biometric security in the new iPhones might have convinced both institutions that mobile payments aren't a huge risk anymore. The site goes further, to suggest that both will create a "Cardholder Present" transaction fee which either matches the card rate, or is close enough to mean that you won't be pulling out a calculator to work out if it's cheaper to use your phone or card to buy subway tokens. Naturally, both financial institutions have denied that any such discussions are taking place, but hopefully it won't be long before these systems reflect the real world.
Chase begins touting benefits of Apple Pay to its customer base
With Apple Pay scheduled to roll out sometime this October, The Loop directs us to the fact that JPMorgan Chase has begun touting the benefits of Apple Pay to its broad customer base. JPMorgan Chase put out a mass mailing this morning trumpeting their newly announced Apple Pay partnership The marketing campaign from Chase gives customers a semi-brief rundown regarding what Apple Pay is and how easy it is to use. Just yesterday, Chase CFO Marianne Lake told attendees at a financial conference that Apple Pay is "the future." Chase, along with representatives from a few other of the nation's top banks, have been quite effusive about the significance of Apple Pay since its introduction yesterday. While it remains to be seen how quickly Apple Pay catches on with customers, the early hands-on impressions from media outlets who were able to test out the service were overwhelmingly positive.
Hands-on first impressions of Apple Pay -- "remarkably smooth"
Though not as sexy as new iPhones or Apple's newfangled Watch, Apple's foray into the world of mobile payments with Apple Pay has the potential to be a real game changer. If Apple Pay catches on, Tim Cook's statement that the platform will "forever change the way we buy things" will prove to be spot-on. Yesterday, Apple allowed a few media outlets some time with Apple Pay and so far the first impressions appear to be overwhelmingly positive. The Verge had some time to take Apple Pay for a test drive and found the experience "remarkably smooth." The Touch ID functionality adds a real sense of security to the process, there's very little software fumbling, and in general everything seems like a cohesive user experience. It's nice. Slashgear also seemed rather impressed with the implementation, calling the payment process "swift" and "pretty darn easy" to use. Apple Pay is slated to go live in October with Apple expecting approximately 220,000 merchant locations to support it at launch. And in light of the recent iCloud hacking scandal, Apple's Eddy Cue made a concerted effort yesterday to highlight the secure nature of Apple Pay. "Security and privacy is at the core of Apple Pay," Cue explained in an Apple press release. "When you're 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. Apple doesn't collect your purchase history, so we don't know what you bought, where you bought it or how much you paid for it." And for good measure, here's one more hands-on video of Apple Pay in action, this one from TechCrunch.
Apple will reportedly receive a small percentage from each Apple Pay transaction
Apple yesterday introduced a new mobile payment platform dubbed Apple Pay that will enable iPhone 6 users to seamlessly pay for goods and services without having to take out a credit card. Instead, a simple and subtle wave of one's iPhone next to a payment reader will do the trick. While Apple yesterday explained how the system works in addition to touting all of the blue-chip companies already signed on to support the payment platform, we weren't provided with any details as to whether or not Apple will be getting a small percentage of each transaction. Now comes word via Bloomberg that the deals Apple struck with banks will give them a piece of the pie. Apple and banks individually negotiated the fees in setting up the service, according to the people, who requested anonymity because terms aren't public. Fees will be charged for every transaction, one person said. The people didn't specify the size, which they said could vary, or whether it's tied to the value of purchases. The mobile-payments market will probably more than quadruple to about $90 billion by 2017, according to Forrester Research. While it remains to be seen if further details emerge, it stands to reason that whatever percentage the banks agreed to pay Apple is rather small. Still, even pennies on the dollar add up extremely quickly when we're talking about millions upon millions of transactions.
Summarizing Apple's iPhone 6 / Watch event
Despite glitches during Apple's livestream of today's event, most of us here at TUAW were able to pick up enough of what was going on to realize immediately just how significant most of the announcements were. Here's a quick summary of some of the topics we found to be the most important: iPhone 6 / iPhone 6 Plus The Apple team spent no time warming up, jumping right into the announcement of the two new iPhone models immediately. The iPhone 6 and iPhone 6 Plus will both be available on September 19, with pre-ordering starting this Friday, September 12. Prices start at US$199 for the 16GB iPhone 6 (64GB and 128GB versions available for $299 and $399 respectively), while the 16GB iPhone 6 Plus starts at $299 (64 GB for $399 and 128GB for $499). Both phones feature a new CPU -- the Apple-designed A8 -- and a new motion coprocessor called the M8. The M8 builds upon the motion-sensing and capturing capabilities of the M7 in the iPhone 5 family by adding a barometer sensitive enough to tell the relative height changes you take climbing a hill or even just going up and down stairs. The A8 features 2 billion transistors, but is 13 percent smaller than the A7 that featured just 1 billion. The company says that the CPU power of the iPhone 6 is about 50 times that of the original iPhone introduced in 2007. The design of the new phones includes ion-strengthened glass, an improved polarizer, a photo-aligned IPS liquid crystal display, and an ultra-thin backlight. The screen size of the iPhone 5 family is 4 inches measured diagonally -- for the iPhone 6, that number is increased to 4.7 inches, and for the iPhone 6 Plus it's 5.5 inches. While the iPhone 5 currently features an 1136 x 640 display at 326 pixels per inch (ppi), the iPhone 6 boosts that number to 1334 x 750 at 326 ppi and the iPhone 6 Plus to 1920 x 1080 -- at 401 pixels per inch. One of the other big changes to the iPhone 6 and 6 Plus is battery life. The iPhone 6 can do Wi-Fi browsing for up to 11 hours (compared to 10 for the iPhone 5s), while the larger battery pack of the iPhone 6 Plus gives it a 12-hour life. If you just use your phone for plain old 3G network voice service, you'll be thrilled to know that you can talk for 14 hours on the iPhone 6, and a full day with the iPhone 6 Plus. The iPhone 6 family supports over 200 LTE carriers worldwide, and these are the first phones Apple has offered to support VoLTE -- Voice over LTE. This allows for simultaneous data and voice access over LTE, rather than either shutting off browsing while you talk or moving your voice calls to 3G. Wi-FI speed has been increased -- the company says it's now 3 times faster than that available on the iPhone 5 and 5s. Speaking of Wi-Fi, the phones also support Wi-Fi calling, meaning that in certain cases your calls will be routed to the Wi-FI network you're connected to, making for crystal-clear voice quality. The camera on the iPhone 6 and 6 Plus got pumped up as well. While the total number of pixels hasn't increased -- it's still 8 MP -- the camera now has larger pixels (1.5 microns), a f/2.2 lens (fast) and has faster autofocusing. Other fun things include a new "burst selfie" mode, high dynamic range (HDR) videos, and improved panoramas that can be up to 43 megapixels big. The iPhone 6 Plus also adds optical image stabilization to reduce camera shake. Videos can be full 1080p at 60 frames per second, and you can shoot up to 240 fps slo-mo at 720p. While plenty of third-party companies have announced their own cases for the iPhone 6 family, Apple is also introducing silicone and leather cases for both phones, including PRODUCT(RED) models. Apple Pay (AKA Pay) Apple announced that the new phones also have near-field communications (NFC) built in, and that they'll be introducing a new financial transaction system in October called Apple Pay. The system combines Touch ID and NFC to make secure payment a reality. How secure? The number provided to the credit card pay station and the CVV code are both different each time you use the system. To add credit cards to Passbook and hence to Apple Pay, you just need to take a photo of the card and the information is added. To pay, hold the iPhone near the pay station with your finger on the Touch ID pad, and a sound indicates that payment has been made. All transactions are not only time-stamped, but also tagged with your location as well. If your iPhone is lost or stolen, just putting it into Lost Mode using Find My iPhone will block additional transactions from being made. At launch, Apple Pay will support credit and debit cards from Bank of America, Capital One, Chase, Citi, and Wells Fargo. Soon, Barclays, Navy Federal Credit Union, PNC, USAA and USBank cards will also be added. At this point, over 220,000 retailers and restaurants around the US can take Apple Pay, including Bloomingdales, Macy's, McDonalds, Petco, Subway, Walgreens, Whole Foods Market, and even Disney Parks. Many apps will also allow Apple Pay to work. You'll be able to use OpenTable to pay for meals at selected restaurants, the MLB AtBat app to buy baseball tickets, and the Target app to buy ... well, a lot of things. Apple Watch (AKA Watch) It's been a while since we've had a "one more thing" moment at an Apple event, and this year the anticipation was high for Apple's rumored "iWatch". It's no longer a rumor -- the Apple Watch, or just "Watch" -- will be out in early 2015, and it's an amazing set of devices. There are three main "lines" of Apple Watch; Watch, Watch Sport, and Watch Edition. Think of the Watch as the "Timex" of the line, Watch Sport as a cool sports watch, and Watch Edition as a high-end fashion watch. Straps for the Watch run from "durable" plastic-like straps for the Watch Sport to high-end "Milanese Loop" straps for the Watch Edition. Many of the straps use magnets to automatically fit the Watch to your wrist. There's too much about these devices to write about here, so I suggest that you use the link in the previous paragraph and go out and read about it for yourself. Also, be sure to watch Apple's video describing the device as "Our most personal device yet." The Watches require an iPhone 5 or 6 to work, but provide some amazing capabilities. Sensors on the back can track your heart rate, and apps will let you "touch" another person with that information. There are adjustable emoji for sending personal messages, and incoming messages that ask you a selection of answers can be automatically answered with a tap. There's a Maps app built in as well. Using haptic responses, you can get walking instructions and the Watch will provide a right or left tap on your wrist to tell you which way to turn. Those same capabilities provide simple taps on your wrist for notification instead of annoying vibrations. Want to look at photos? There's a Photos app for viewing your library in the cloud. You can use Siri to dictate responses to emails or other messages, ask questions, or even find movies or restaurants. But one of the biggest features of the Watch is its health and fitness capabilities. It's more than just a fitness tracker, providing input to the Health app in iOS 8 and then motivating your activity in a number of ways through a Fitness app. It will tell you how often you should stand up to prevent sitting-related diseases and injuries, slowly goad you to build your walking and stair climbing, and so on. The UI of the Watch is incredible, using what's called the Digital Crown to scroll through items or zoom in/out. There's a touch screen to select and tap on apps, and a button that provides functionality in certain apps. And of course, developers will be able to use WatchKit to create apps to push the functionality even further. U2 There was even more! U2 came on stage to perform a song from their new album Songs of Innocence, and then Apple CEO Tim Cook and Bono announced that the album is going to be free to every iTunes customer -- that's 500 million people worldwide. While the album still hasn't shown up in iTunes for many users, it will. Conclusion As an Apple watcher since 1984, this was one of the most incredible events I've watched. That includes the 2007 intro of the iPhone, the 2010 iPad introduction, and some pretty amazing announcements and "Stevenotes" over the years. I don't think people will really understand the implications of Apple Pay and Apple Watch for many years, but they're set -- along with the new iPhones and all other Apple products -- to take us into a very interesting future.
The entire Apple event in just 84 seconds
Hey, you're busy and you don't have time to watch a multi-hour Apple livestream video. No problem! We've done the hard work for you. Here's the entire September 9, 2014 Apple event in just 84 seconds. Have fun!
iPhone 6 introduces Apple Pay turning your phone into your wallet
With the iPhone 6, Apple is taking on mobile payments in a big way. Every day Americans make 200 million transactions using credit cards. Apple wants to simplify that. Rather than take your card out of your wallet or purse and swipe it in the machine with every purchase, the iPhone 6 allows you to simply swipe your phone over a sensor at the point of sale. Your payment is made using your preexisting credit cards. Using the iPhone 6 and 6+'s NFC antenna and Touch ID Apple is able to quickly and securely process payments. Your personal data is protected by their new Secure Element chip, which encrypts your information so it cannot be accessed without your approval. Your cards are saved in Passbook. You can easily add the cards already stored on your iTunes account, or add new cards using the iSight camera. Cards in passbook are saved without showing the whole credit card number. Apple doesn't store the credit card number or give it to the merchant. They use a secure, onetime payment number, that change with every purchase. If you lose your phone you can cancel payments to the phone rather than having to cancel all your cards like you do when losing your wallet. Apple is emphasizing privacy with this feature. They don't know what you bought, where you bought it, or for how much money. The cashier won't see your name, number, or security code, as he does when you hand your card over. At launch they'll have partnerships with Mastercard, American Express, and Visa. Currently they're working with the banks and companies that handle 83% of all credit card purchases. Major stores like Subway, Walgreens, Staples, Whole Foods, and McDonalds have already committed to the technology. The later is actually adding Apple Pay to their drive through. Online payments, 1billion dollars a day 5 million transactions. One-touch checkout for online retailers, using your iOS device. Makes shopping on iOS easier than ever. Target, Uber, Groupon, Panera take out, MLB tickets, the Apple Store are partnering with Apple to use the service on their sites. Service like Open Table will allow you to make reservations and pay for your meal, all from your phone. It launches in the US in October of 2014, with more countries to follow soon after.
