Apple Pay Security Features Explained

What is Apple Pay?

Apple Pay is the Cupertino based company's first meaningful foray into NFC payment technology. It allows Apple mobile devices to make contactless payments at matching point-of-sale terminals. The technology is said to be an improvement on the now aged chip-and-pin technology and a final nail in the coffin for magnetic stripe payment process.

Apple have gained some traction by bringing together a fractured market and making the NFC payment process more convenient for consumers.

How it works

Users add a credit card from their pre-existing iTunes account, or add a new card using the phone's iSight camera. Users can also user their Apple devices to find participating vendors, both online and offline vendors.

To make a payment in-store:

Hold iPhone to the card reader with registered finger or thumb resting on the home button to initiate Touch ID
Passbook will automatically launch as it approaches
iPhone will vibrate and make a pinging noise to signify that payment has been received
A tick with the legend 'Done' will appear onscreen.

Important Features

Secure Element, a dedicated chip that stores encrypted payment information. This information is never transmitted, a unique alias of the information stored on the device will be sent to make payment.

Touch ID is Apple's fingerprint recognition feature, built into the home button of its mobile hardware. The fingerprint information is stored locally and not remotely on Apple servers.

Passbook is Apple's wallet feature that allows users to store their credit, debit and loyalty cards on a device. The cards stored in this wallet are used in Apple Pay.

How Secure is it?

Touch ID, the Secure Element chip, and a dynamic security code that is generated for each transaction, replace the static security code on the back of your credit card.

A hacker who was able to eavesdrop on a purchase would only capture the Device Account Number combined with the transaction code. It is highly unlikely that an eavesdropped communication could be reused for malicious purposes.