Apple pay

The Move Towards A Cashless World: Apple Pay Continues Expansion, But Chip And Pin Proves Unpopular During Festive Period

Apple has expanded the number of issuers participating in the Apple Pay network, reports Mac Rumours. The new list now includes 58 additional banks, credit unions and financial institutions, and takes the total number of issuers supporting the contact-less payment service in the United States to 900. Apple has committed to rolling out Apple Pay across the globe and has already launched its payments service in Canada and Australia.

Apple Pay is one of many trends pushing consumers further toward a cashless world, along with the decline in use of personal checks, the increase in use of debit and credit card use, and technological innovations such as PayPal, Square and Bitcoin.

According to RBR’s study of Global Payments, there were 417 billion cashless payments made in 60 countries worldwide during 2014. Cards are the most popular and fastest growing means of cashless payment, making up 55 percent of cashless transactions worldwide.

In every region of the world, cards are the most popular method of cashless payment, with use highest in North America and the Middle East and Africa, and lowest in Asia-Pacific and Latin America.

Apple Pay
Apple Pay allows iPhone users to pay for purchases using their iPhone’s NFC capabilities instead of using their credit card. [Photo by Bryan Thomas/Getty Images]
The U.S. has been slow in adopting some of these cashless payment technologies. Chip and pin payment cards were only launched October last year. EuroPay, MasterCard, and Visa (EMV) pushed hard to get U.S. businesses to take up this form of payment, a drive that was given extra momentum after a series of major credit card fraud scandals.

Although an October 1, 2015, deadline set for businesses to install EMV chip and pin compliant payment terminals, a survey found 36 percent of business owners had no idea what the switch to EMV-compliant terminals meant. Earlier in the year Lyndsey Lang of Fattmerchant, a leading payments processing company, warned merchants of the importance of having EMV- compliant technology – not doing so would incur financial liability from any fraudulent activity.

But, use of EMV does not seem to have been a success over the Christmas holiday season, with reports of retailers bypassing card readers and going back to signatures. November and December traditionally bring in the largest sales volume of the year, and with the higher volume comes a correspondingly higher risk of fraud. Many retailers were willing to risk taking on extra liability in order to spare themselves, and their customers, the headache of dealing with the new chip cards during the holidays.

The seemingly unstoppable move toward cashless payment systems, such as Apple Pay, PayPal and EMV has given consumers convenience, but it has also opened up new avenues for fraud and has ignited a technological arms race between financial institutions and hackers.

Cashless Payments
Chip and Pin payments. [Photo illustration by Matt Cardy/Getty Images]
For example, when retailers ceased storing customer credit card numbers and transactions in databases, hackers penetrated networks to access unencrypted data, live, as it was sent to banks for authentication. When retailers encrypted that live data in transit, attackers installed malware on point-of-sale readers to access data as the card got swiped before the system encrypted the numbers.

The EMV pin and chip system is being hailed in the U.S. as a safer system. The cards contain a chip that authenticates the bank card and generates a one-time transaction code for each purchase. This prevents hackers from embossing stolen data onto fake, cloned cards to use for fraudulent purchases in stores.

Ultimately, neither EMV or systems such as Apple Pay can end fraud; perhaps, momentarily, but the war on fraud is a live struggle. One that will likely ebb and flow with both security and fraud techniques fending off each other in a continuously changing form. Like a virus, any time the path of attack is shut, the fraudsters simply adapt and find a new one.

[Photo by Justin Sullivan/Getty Images]