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Apple Pay: Now Apple Wants You to Leave the Credit Cards at Home

Apple wants to make you pay — literally.

The company’s new iPhone 6 and Apple Watch are getting most of the attention today, but the new Apple Pay system may have a more immediate impact on your everyday life.

Photos of an iPhone being swiped using Apple Pay
Photos of an iPhone being swiped using Apple Pay

Simply put, Apple wants to replace the credit cards in your wallet — and the wallet itself — with an iPhone or an Apple Watch. Apple Pay is how the company plans to do it, using the near-field communication (NFC) radio built into both devices.

MORE: What Is NFC, and Why Does It Matter for the iPhone 6?

Here’s how it works:

1. Walk into an Apple Pay-friendly retailer.

2. Select some swag and bring it to the checkout counter.

3. Tap your phone against the NFC scanner in the store while holding your finger against the phone’s Touch ID fingerprint reader or a button on the watch.

4. Go home.

The purchase price is automatically deducted from your credit card account (not your iTunes account, as some rumors had predicted). Neither Apple nor the retailer gets its hands on your credit card information. That’s because the only data Apple Pay transmits is a unique device ID, along with a single-use security code. That unique ID is stored inside the encrypted Secure Element chip built into the iPhone 6 and Apple Watch.

This could theoretically prevent things like the massive data breaches at Target or Home Depot, where millions of credit card numbers and other customer data were siphoned off the stores’ networks by cyber-crooks.

Apple says it won’t store details of any transactions on its servers, though you will be able to view receipts inside your device’s Passbook app.

image

How do you get your existing credit cards onto Apple Pay? Easy. Take a photo of them. The Apple Pay app reads the numbers on the cards, links to your bank, and stores the info safely (Apple promises) in the Passbook app, alongside your boarding passes, coupons, and other digital data. Or you can go old school and enter your numbers manually.

If you lose your phone, you can use Apple’s Find My iPhone from your home computer to put the device in Lost Mode or wipe it completely. Apple CEO Tim Cook said you would not have to cancel your credit cards if you lost your phone. Details on how you might cancel or dispute purchases made via Apple Pay were not available at press time.

Apple Pay is supported by a half-dozen large banks such as Citi and Wells Fargo, with more to come. The company says it can be used in more than 220,000 retail locations, including Bloomingdale’s, McDonald’s, Subway, Walgreens, and Apple Stores (natch). You can also use Apple Pay inside a store’s mobile apps, such as Target’s or Starbucks’.

Apple Pay will be available as a free update to iOS 8 starting in October. You’ll need an iPhone 6, iPhone 6 Plus, or Apple Watch (due out next year) to take advantage of it.

Of course, mobile payments are not a new concept. There are dozens of handsets with NFC chips inside them, but so far they’ve hardly made a dent in the retail world.

A big reason for that has been Apple’s resistance to putting NFC chips in its handsets. Now that the world’s most effective marketers have some skin in the game — and have persuaded some of the world’s biggest banks and retail chains to play along — this could be what it takes to finally make mobile wallets take off.

Questions, complaints, kudos? Email Dan Tynan at ModFamily1@yahoo.com.