Wednesday, September 10, 2014

Banks, credit-card companies see Apple Pay as boon for customers

By SitalS. Patel

NEW YORK (MarketWatch) -- All it takes is one touch to pay.

Apple Inc. AAPL, -0.38%  has introduced a new, easier way for customers to make purchases by simply swiping their phones, called Apple Pay.

“Consumers love the tap and pay experience,” said Ed McLaughlin, chief emerging payments officer at MasterCard. “It’s the fastest way to check out and once consumers use this they never go back.” Paying your cab fare, eating McDonald’s and ordering from OpenTable just got easier, he said. “You are always holding your phone, but might not know where your wallet is.”

Apple claims using Apple Pay to shop in stores and online is more secure and private than handing over your credit or debit card, because cashiers won’t see your name, credit card number or security code. Instead, the system assigns and stores unique account numbers on your device for each card, then generates one-time codes to process payments. Shopping on iPhone apps with Apple Pay will also be a lot easier, since payment can be done with a single tap.

Apple says the new payment system will work with top bank issuers that handle 83% of credit card volume, including MasterCard Inc. MA, -0.21% Visa Inc. V, -0.69%   and American Express Co. AXP, -1.16%  cards issued by Bank of America Corp. BAC, -1.28%  , Citigroup Inc. C, -1.52%  , Wells Fargo & Co. WFC, -0.78%   and J.P. Morgan Chase & Co. JPM, -1.39%

JPM, -1.39% Mobile payments are seeing rapid growth outside the U.S., says McLaughlin -- more than 20% of MasterCard transactions in Canada are touch-to-pay -- and Apple Pay may go a long way toward increasing touch-to-pay transactions in the U.S.

J.P. Morgan Chase & Co. is “very excited” about the new payment system, said the bank’s CFO Marianne Lake on Tuesday at a financial conference in New York. Lake endorsed Apple Pay by saying it is “significantly supreme” and safe. J.P. Morgan hopes to unveil its own mobile wallet in the coming months.

Apple Pay is expected to be available to use in October in the U.S. with more than 220,000 stores, including Target Corp. TGT, +0.53% Macy’s Inc. M, -0.35% Bloomingdale’s, Walgreen Co. WAG, -0.56%  and Nike Inc. NKE, -0.68% Apple says it won’t store users’ purchasing history and if the iPhone gets lost or stolen, payments can be suspended from the device.

“We’re providing our customers with tools to make their financial lives better, including our 30 million digital banking customers,” said Brian Moynihan, CEO of Bank of America, in a news release about Apple Pay. “For them, better means simple and convenient.”

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