It's a new era at the cash register or should we say mobile register as Apple Pay (AAPL) launches today at 220,000 restaurants and shops. The new mobile payments system for the iPhone 6 and 6 Plus is supposed to eventually replace cash and credit cards. The devices let consumers pay for items or services merely by using their phone's fingerprint scanner and holding the device up to the register.
Apple Pay joins a host of payment-technology providers looking to get into the mobile payment business. Emarketer estimates the market will be worth $118 billion by 2018, from $3.5 billion this year.
Here’s how it works: Apple Pay sends payment information via a short-wave wireless signal. The message travels from a special chip inside the iPhone 6 to the register. The charge goes straight to your credit or debit card. But Aaron Ross who is a tech security expert and founder of RossBackup.com is dubious. He’s seen hackers at work and says they always find a way in if they look hard enough. Ross claims the signal is vulnerable as “someone could create an amplifier to increase that signal by standing near the register or checkout, and they may be able to access your information and then recrypt it sometime later.”
Ross says Apple Pay hasn’t been around long enough to say it is fully secure. He is still bullish on plastic despite the recent credit-card breaches at Home Depot (HD) and Target (TGT). Ross points out there are regulations in place to protect consumers in case their credit cards are stolen, breached or unknown charges appear on their statements. But Ross is not confident that consumers will get the same kind of protection when using Apple Pay.
"The banks say they will cover this with Apple Pay, but I am not sure if that’s regulated by the government and if there is a breach will the banks really pony up?”
The system works with credit and debit cards from Visa (V), MasterCard (MA) and American Express (AXP). Chase (JPM) is one of the issuing banks. A spokesman for Chase Bank told The Daily Dot that with Apple Pay “zero liability for fraudulent transactions still applies.”
Ross says he’s going to take a sit back and wait attitude as Apple Pay kicks in to make sure all security kinks are worked out. Until then, he plans to still open up his real leather wallet and pull out his credit card when it comes for time to pay.