Token technology will make Apple's mobile payments extra secure

Token technology will make Apple’s mobile payments extra secure


Apple Pay's ease of use may lead to increased impulse buying -- and that's exactly what Apple's hoping for.
Apple could use both NFC and tokenization as part of its mobile payments drive.

In addition to near field communication (NFC) as part of its mobile payments drive, Apple will be incorporating something called “tokenisation” technology, according to sources who spoke with Bank Innovation.

As the report explains, “Financial institutions — card issuers and networks — prefer token technology because it replaces primary account numbers, those 16-digit card numbers on the front of credit and debit cards. Instead, the tokenization technology uses complex codes that are easily transmittable over the air and between devices, but that are used only once, so even if they are intercepted, are of no use to fraudsters.”

Apple has been investigating tokenization technology for several years, with multiple patents relating to the process dating back as far as 2009.

Given the company’s recent spate of (largely unearned) bad publicity related to the iCloud hacking incident, tokenization could be a valuable tool for Apple to help emphasize how seriously it takes security, particularly as this involves user’s money.

“[Tokenization] certainly addresses security and fraud…there’s another part of the story — tokens provide innovators with flexible, purposed, and driven credentials in their customers’ experiences instead of actual data,” says Visa’s vice president of digital solutions, Brad Greene. “If tokens are intercepted by an attacker… [they] would be worthless or greatly diminish.”

Going forward, James Wester, global head of payments at IDC Research, points out that Apple could potentially apply tokenization technology to “real-life applications, as well as like transit, building access, and hotel keys.”

Bank Innovation also claims that it has independently verified that both the iWatch and iPhone 6 (both of which Apple appears set to debut tomorrow) will include NFC and will be a part of transferring tokens between devices. In doing so it backs up a report we heard last week, suggesting that Apple’s new wearable and handset will make mobile payments as easy as a tap on the wrist.

Source: Bank Innovation

Via: App Advice