Interviews

Wallet welcome

by Mark Rowe

Apple Pay strikes a balance between security and user experience, writes Ian Hermon, mobile payments specialist at Thales e-Security.

On July 14, the arrival of Apple Pay in the UK caused much excitement. Now consumers have access to a slick and quick payment option with a brand they love and carry around in their pockets 24-7. The mobile payment service is currently available across the high street and on the London Underground, nearly a quarter of a million outlets now offer Apple Pay, making it more widely available in the UK than when it first launched in the US in October last year.

Its UK debut is sure to cause a real shift in the payments landscape – causing further momentum in the UK’s extensive contactless NFC terminal infrastructure. It is this already existent ‘contactless-friendly’ environment that can be identified as one of the many ingredients that will help Apple Pay succeed in the UK market. Currently there are around 250,000 merchant locations already accepting contactless transactions in the UK and this has resulted in 52.6 million contactless transactions made by Britons in March alone this year. In fact, the number of contactless Visa cards in circulation today has grown 37 per cent in one year. Given that one in four British consumers expect to use their mobile to make a payment in the next year, according to MasterCard, it’s only a matter of time before we see this exponential growth happen in the mobile payments arena as well.

However, many consumers do still have reservations over the technology, particularly around security, as a recent MasterCard survey found that half of respondents are worried that their phone could be hacked. This cautious approach to mobile payments is perhaps unsurprising. The growing number of data breaches and hacks illustrate just how rife cyber-crime is today and once Apple Pay takes off, you can be sure that the mobile payments arena will become an even more attractive target for attackers.

Therefore, Apple is going to find itself in a constant battle to balance user convenience with ensuring security is present right from the start. Security needs be to a number one priority – especially when you consider that four in ten UK consumers said they would wait for others to confirm that mobile contactless payments were safe before using it themselves. Therefore, it is clear that the widespread adoption of mobile payments rests on reassuring consumers their valuable data is safe and with that in mind, it is encouraging to see that Apple has put tokenisation at the heart of its security agenda.

Working with the likes of Visa, MasterCard and American Express, as well as others, Apple ensures that only temporary ‘tokens’ are stored on the phone. These tokens are used in transactions to represent a user’s account, but are useless to hackers and easily deleted, without impacting a user’s bank account or credit card. Not only does this tokenisation process reduce the risk at the phone it also protects the back-end infrastructure that communicates with the phone to set up payment accounts and approve transactions. This will help issuers with payment channel separation and also protect the merchant, and Apple itself, in the event of a data breach.

Apple has furthered strengthened the security measures of its payment service by integrating the Touch ID biometric authentication capability of the iPhone. Given that a fingerprint is completely unique to the user, and circumventing the security measure as part of the transaction process is extremely difficult, accessing precious payment data is made a lot more challenging for the hacker.

Delivering the necessary level of trust to ensure consumers are motivated enough to adopt mobile payments lies with addressing their security concerns. Security always has the potential to cause friction and detract from the user experience but by striking a balance between the two, Apple can lead the way for others to follow. The customer demand is there so it’s just a matter of time before we reach the mobile payment tipping point in the UK and we see British customers reaching for their phones instead of their wallets.

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