Apple Pay contactless payments use proven NFC (near field communication) technology built into compatible devices in conjunction with the iPhone’s existing Touch ID fingerprint sensor for security, allowing single step transactions. NFC automatically launches Pay when placed near a NFC terminal resulting in rapid transactions; supporting ‘queue busting’ customer journeys, such as transport hubs or supermarket checkouts.
Apple Pay can also be used online in a similar manner as long as merchants add support to their mobile apps. The payee credentials are held in the scheme’s enterprise systems but the transaction is tokenised, so no card information is available to the retailer.
Apple Pay maximum contactless payments will initially be limited by the wider industry agreed of £20 (rising to £30) but as early confidence builds in Apple Pay, it’s hard to see this limit remaining in the long term.
From a merchant perspective there is a 0.15% fee per transaction, which may initially limit merchant adoption. Following Apple Pay’s UK launch, many of the earlier disputes over Apple transaction fees seem to be resolved – so all eyes are on the level of adoption in the UK which many think will comfortably surpass the US.