Brief: Apple Pay Signals A Fundamental Shift In Secure Payments Technologies

During the past year, customers, US customers in particular, were rocked by revelations that hackers had stolen their credit and debit card numbers from trusted and respected retailers such as Target (70 million records) and the latest, Home Depot (details are unfolding, but early reports indicate that this breach will trump Target in its scale). In both cases, hackers used malware to scrape customers' credit card numbers from low-tech POS systems with magnetic stripe readers. Customers, merchants, and financial institutions are all eager for more-secure payment methods that will lower the costs and end the headaches of these constant breaches. That's why Apple's announcement of its new Apple Pay service is so exciting. The service offers contactless near field communication (NFC) payments, tokenization of card numbers, and a relatively easy and effortless user experience from the iPhone 6 and Apple Watch — secured by fingerprint biometric authentication. For security and risk (S&R) professionals responsible for advising business leaders on secure payments, this report discusses the pros and cons of Apple Pay and examines how it will impact the future of secure payments and mobile authentication.