apple pay

The very ease that makes mobile payments so appealing – just tap or wave your smartphone or watch to pay – has made some consumers nervous about adopting this technology.

People fear losing their smartphones and devices, and their vital credit card information falling into the wrong hands. They also worry about scam artists and hackers intercepting information.


But is there really reason for concern? The reassuring word from security experts is that the mobile wallet is actually much safer than the entrenched system of debit and credit cards with their magnet stripes.

What Makes It More Secure?

For one thing, mobile apps don’t expose your card numbers. For instance, a customer using Apple Pay (available for iPhones 6 and 6 plus, Apple Watch, iPad Air 2, and iPad mini 3) to buy printer cartridges at OfficeMax never has to reveal the 16-digit number on the credit card, even to the store.

“Merchants never have the card-number details, which is important because a lot of recent frauds have involved merchants storing card numbers in their systems long after the transaction has taken place,” says Vince Hruska, senior vice president of product strategies for City National Bank, which now offers Apple Pay for its credit and check cards. 

Buyers use the same debit and credit card accounts they have always used, but instead of the card number being passed, a 16-digit replacement number is used, Hruska explains. After a cardholder enters the card’s digits, including an expiration date and security code, into an Apple Pay app, the app is able to scramble the data and communicate it wirelessly to special readers that must be installed at the cashier stand. A new randomized number, known as a “token,” is generated with the transaction, so it is only good for that particular purchase and cannot be reused if the wireless signal is somehow intercepted.

The chance of the signal being intercepted is very slim, Hruska notes. It travels just a few feet from the digital wallet to the reader, known as a near-field communication (NFC) device, which is able to associate the random digits to the actual card number so the transaction can go through. When Apple Pay and the NFC reader are used, only the banks know which account numbers were involved in the transaction.

Apple’s Touch ID fingerprint authentication system also protects iPhone users in the case of loss or theft of the smartphone with the Apple Pay app. The iPhone’s biometric fingerprint scanner must authenticate the user to make a purchase. Without your fingerprint, a thief is out of luck.

Who’s Using It?

Addressing security concerns has been the biggest issue facing technology companies and retailers in moving to the mobile wallet. A 2013 survey by Thrive Analytics found that 37 percent of consumers who chose not to use the apps cited fears over security as the main reason. The poll, involving more than 2,000 consumers, found that 19 percent worried they might lose their cell phones and another 19 percent said they lacked adequate information.

The latter number suggested that more than 80 percent of consumers do know about this technology, but need their fears about security assuaged before adopting.

“What we found was a surprisingly high number of U.S. consumers recognize digital wallets as an alternative to cash-based transactions,” Thrive Analytics said in its report. At the time, however, less than one-third of consumers used the technology, and the company said, “Security concerns remain the main barrier to adoption.”

However, as the technology and its security becomes more familiar over the next several years, analysts expect mass adoption. And retailers are ready. Last September, when Apple CEO Tim Cook announced the launch of Apple Pay, there were already 220,000 vendors ready to accept such transactions, including Macy’s, Bloomingdale’s, Walgreens, Whole Foods, McDonald’s and Subway. Other major retailers such as Best Buy, Panera Bread and Sephora have since joined the list, as have amusement parks, supermarkets, stadiums, vending machines and apps such as Uber and Lyft. In total, Apple Pay is now accepted at 700,000 locations, Cook said recently, and other mobile-technology giants such as Google and Samsung are rolling out their own mobile payment systems, spurred by the increasing adoption of Apple Pay.

Hruska is confident that consumers will be won over by the ease and security of the new technology. “We’re already working on Samsung Pay,” Hruska says. “The model that both Google and Apple have put together will only proliferate.”