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PHOENIX Apple enters the mobile wallet world in a stronger position than most of its rivals, largely because it sought the support of card networks and banks before the first Apple Pay transaction ever took place.
October 21 -
A few hours into Apple Pay's Oct. 20 launch, Apple CEO Tim Cook promised the company was not looking to exploit its payments data.
October 20 -
Apple is betting that tokenization systems offered by payment processors will provide a security boost to its new Apple Pay system at a time when consumers are wary of Apple's cloud-based services.
September 9
Scattered reports of double payments and failed transactions have begun to bubble to the surface after what initially looked like a relatively smooth introduction of Apple Pay.
Some Bank of America customers reported Tuesday that they were charged twice for purchases made through Apple's new payment system. One was a CNN Money reporter who
Bank of America acknowledged the problem, but said it was limited.
"We apologize for the inconvenience and we're correcting the issue. All duplicates will be refunded," said Tara Burke, a spokesperson for the bank. She said that roughly 1,000 of the bank's customers had been affected.
Cornerstone Advisors, a Scottsdale, Ariz.-based consulting firm, said that the issue was likely a coding problem on Bank of America's end. Burke declined to comment.
Some of Cornerstone's clients who were part of the first wave of financial institutions adopting Apple Pay experienced a different problem on Monday, the day the program debuted. They reported feedback from customers saying that their phones rejected the Apple Pay transaction because their institution wasnt supported.
"There are more problems than just this Bank of America issue," said Bob Roth, Cornerstone's payment practices manager. Roth said that Cornerstone had not canvassed its clients but he did not believe issues were widespread.
"New technology's always going to have issues three days in," Roth said, adding that he thought Apple Pay's overall debut had been "pretty impressive." A representative for Apple did not return a call before press time Wednesday.
Two of the vendors transitioning merchants and financial institutions onto Apple Pay agreed.
Pete Donat, head of new ventures for payment security and infrastructure provider First Data, said Tuesday that the companys clients, including several of the first banks to adopt Apple's new one-touch payment system, had seen few problems with the mobile payment rollout.
Like First Data, Chase's mobile payment division also helps clients with the infrastructure necessary to use Apple Pay. Chase mobile's general manager, Tom O'Brien, said that though the company "found a lot of things that we fixed along the way" to Apple Pay's debut, so far it's provided a, "really smooth, really secure customer experience." According to O'Brien, Apple Pay signups by customers on Tuesday were seven times higher than traditional card enrollment a one day snapshot but an indication of momentum and adoption of a new product on the consumer side.
That momentum seems to extend to the financial side as well. "The banks we're talking to are generally excited about the opportunity to participate in Apple Pay," Donat said, saying that he predicts thousands will soon follow the
Roth, of Cornerstone, said the big question surrounding Apple Pay will be how the experience goes for that first wave of adopters.
Chase and First Data both provide physical platforms that support near-field communication transactions, which mobile payment systems like Apple Pay and Google Wallet use, but both are also among the several companies (a list of which can be seen on
"We think in-app payments are going to be one of the higher growth areas," Donat said. "Apple's done a good job, as have the networks and others involved, of riding on an existing standard," of protocols for tokenization.
Apple Pay uses tokenization to protect transaction information. Essentially, tokenization provides a substitute number for a credit card, a Device Primary Account Number that can only be used on the device it's created for. Apple Pay isn't the first payment system to use this Google Wallet, which launched in 2011 also uses tokenization but according to Donat Apple Pay's tokenization, for which First Data is a service provider, requires end-to-end infrastructure adoption between merchants and banks.
"The banks needed to be able to receive new information and adopt their systems to receive tokenization," Donat said. "It's complicated, but we're hoping the complications are invisible to the customer.
One early complication that customers have seen is the double payment issue. Tokenization made troubleshooting the issue problematic: in the Apple Pay transaction personal customer information is not transmitted,
Donat described First Data as "bullish on Apple Pay" because of Apple's commitment to customer privacy, with tokenization being the major tool towards that.
Donat said tokenization adoption to set up compatibility with Apple Pay's security measures won't be a hurdle for smaller institutions. A press contact for First Data said via email that many of First Data's smaller customers have signed up for its support service and plan to go live in weeks.
When asked separately about the cost of building that tokenization infrastructure, O'Brien, Chase's general manager for mobile payments, said, "It certainly is an investment," but, "one well worth it.
Consultant Bob Roth agreed with Donat and O'Brien's assessments. "These bankers are going to move heaven and earth to make [Apple Pay] happen," Roth said. "It's not just a fly-by-night, give-it-a-try deal."
