Resolved Why won't Apple Pay work with all credit cards?

[hasanahmad]

Apple could have juat decided to offer something similar to what PayPal offers. Why didn't they?

Because its the credit card companies which has decide to use the service which acts as an arbitrator where you never use the card, you use the unique ID generated by the card on every transaction which as a result makes the transaction safer.

 

[fins831]

Question,

I have Amex blue cash, 6 percent back on groceries. If I use Apple Pay with Amex attached, do I still get my 6 percent cash back? Or does the transaction show up as itunes purchase and my amex gets charged by apple and not grocer?

 

[narenh]

The card is processed just as it would be if you swiped it. You'll continue to accrue all your rewards!

 

[fins831]

The card is processed just as it would be if you swiped it. You'll continue to accrue all your rewards!

much appreciated

 

[Ntombi]

Is there a list of supported banks? I'm really hoping I can with mine, because mine's a smaller regional bank, and I'm hoping to start using Apple Pay out of the gate.

There are over 500 banks/credit unions who are in so far, and more added every day. The best thing is just to ask your bank directly.

I belong to a local credit union which doesn't support it yet, but I've talked to the branch manager and sent an e-mail. I'm hoping it happens soon.

 

[RCRod83]

Question,

I have Amex blue cash, 6 percent back on groceries. If I use Apple Pay with Amex attached, do I still get my 6 percent cash back? Or does the transaction show up as itunes purchase and my amex gets charged by apple and not grocer?

Yes, you will continue to receive the same benefits on your card. Apple does not become the merchant processing the credit card. They are simply changing the mechanism in which you provide the store your credit card information (swipe vs NFC).

 

[moonman239]

Apple could have done what PayPal does but they chose not to.

There are many reasons for this, but perhaps the most significant one is that they do not have to, or want to, have all of the credit card numbers in a database so that they can charge them for the merchant - the way that PayPal does.

Apple is implementing a very new part of the credit card processing system - EMV Tokenization - which is one of the most secure ways to process credit cards at retail point of sale - where most of the recent attacks have been happening.

In order for a card to be used with EMV Tokenization, the bank that issued the card has to support the new standard as well - and has to agree to work with the tokenization provider (in this case, Apple). Not all banks are ready to support EMV Tokenization and not all of those that do support it are willing to work with Apple.

In the long run, virtually every bank will likely get onboard with EMV Tokenization in general (and quite likely with Apple in particular).

EMV Tokenization reduces the chance of fraud because the token is unique for each transaction. Apple's implementation - tied to Touch ID and the Secure Element in the A8 child - is more secure even than that because the generation of the token for a given transaction is tightly tied to the owner of that phone (or next year - that specific watch).

These two things together will virtually eliminate the usefulness of mass credit card data breaches. THAT is why the banks are willing to give apple a small piece of their cut for transactions that get processed through Apple Pay... because even giving Apple that money they stand to SAVE a whole lot of money in reduced fraud.

Apple is the logical "launch partner" for such an initiative because very quickly there will be tens of millions of iPhone 6's out in the wild that can take advantage of the system. But there's no reason to think that other phone manufacturers can't/won't build the same sort of capabilities into their phones/smart watches... even without the TouchID part, EMV Tokenization will still reduce fraud greatly.

This is a very good explanation! Thanks!