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So what’s wrong with your plastic payment cards? To make the long story short, there is no meaningful security on them. Your payment card number is embossed on the front side, and embedded in a magnetic stripe on the backside, or in a built-in chip.

And during transactions, they transmit your payment card number to the merchant and to the bank for verification through what you hope is a securely-encrypted connection. The issuing banks generally keep their systems incredibly secure but the problem is with merchants.

In the 2010s, in Europe, NFC contactless payment terminals became a standard. NFC or Near-Field Communication is a technology for communication between two electronic devices over a close distance (less than 4 cm).

However, still, the only way to keep your money safe is for the merchant to never have your payment card number in the first place.

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Why Do I Use Apple Pay?

You have probably heard of it as an easy, secure, and private way to pay. But what is Apple Pay? Apple Pay is a mobile payment service by Apple. It allows me to make payments in person, within apps, and on the websites. It works with any merchant that accepts contactless payments.

Security and privacy are at the core of Apple Pay. When I am using Apple Pay in a store, restaurant, or other place, merchants no longer see my name, payment card number, and security code. Apple doesn’t collect my purchase history, so Apple doesn’t know what I bought, where I bought it or how much I paid for it. And if my iPhone is lost or stolen, I can use the Find My app to quickly suspend payments from that device.

Fast And Secure Way To Pay

Apple Pay has already changed the way I pay. One of the biggest benefits of Apple Pay actually happens in the background without you seeing it. When I add my payment card with Apple Pay, the actual payment card number is not stored on the device nor on Apple servers. Instead, a unique payment token (so-called “Device Account Number”) is assigned, encrypted, and securely stored in the Secure Element on my iPhone or Apple Watch.

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The payment token refers to a random surrogate value for my card number. Each transaction is then authorized with a one-time transaction-unique number. To create it, a token cryptogram, a dynamic security code, is generated by Apple using my payment token and additional transaction-specific data.

Actually, this turning of the payment card number into the payment token is called “tokenization”. To “tokenize” something means to turn it into something else. This new thing then represents the original thing. But it becomes unrecognizable or unusable outside of a certain context. Like you would go to a casino and purchase tokens to play the games. The tokens represent your money. You can use the tokens for slots, roulette, or perhaps poker, but you can’t use them once you leave the casino. The tokens have no value outside of that specific place.

When adding my payment card to Apple Pay, this is the only step where my real payment card number is ever used. The payment card number is sent over an encrypted connection first to Apple, who has to see it to know which bank to route it to. Apple deletes the payment card number after I have added my payment card. The payment card number is then sent to my bank who generates and sends my payment token back to Apple. It is sent in an encrypted format that can be decrypted only by my iPhone.

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So Apple never sees my payment token and acts only as an intermediary to send my payment token back to my iPhone. Once my iPhone receives my payment token, it then stores it in the Secure Element. In other words, my individual Apple Pay transactions are only between me, merchants, and my bank.

So I was really happy when Apple Pay expanded to Raiffeisenbank last year and continued to Volksbank Löbau-Zittau.

For me, Apple Pay means better, faster, and more secure payments. I simply hold my iPhone or Apple Watch in front of a cash register terminal and pay in seconds. It is also a safe way to pay, helping me avoid hand contact and touching cash. Someone would call this an exceptional customer experience nowadays, right?


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