I would like to focus on fin tech that improves the traditional credit card payment process by eliminating the use of physical credit cards. Credit card theft and skimming of PII can be drastically minimized by using Near Field Communication(NFC) technology in your mobile device and converting it into a contact less payment system.
Near-field communication (NFC) is a set of communication protocols that enable two electronic devices, one of which is usually a portable device such as a smartphone, to establish communication by bringing them within 4 cm of each other.It has three modes of communication but the one significant to us is:
- NFC card emulation: This enables the NFC device to behave as a standard Smartcard.
A contact less card requires only close proximity to a reader. Both the reader and the card have antennae, and the two communicate using radio frequencies (RF) over this contact less link.There is no set-up required. The connection is more reliable and does not suffer problems of contact wear, corrosion and dirt experienced by systems using physical connectors.
In Apple Pay, NFC technology is coupled with bio metric security and tokenization to make it the most secure payment transaction possible. Traditionally a card-present transaction is considered more secure than a card-not -present transaction over the web or during in-app payment. Unlike popular belief, research shows that Apple payments (a card-not -present transaction) is more secure than the traditional card-present transactions. This is because of the inherent security that is built into a transaction that can occur only at 3-5 cms distance.
When a card is added Apple Pay, a unique Device Account Number is assigned, encrypted, and securely stored in a dedicated chip in iPhone, iPad, and Apple Watch. These numbers are never stored on Apple servers. And when you make a purchase, the Device Account Number, along with a transaction-specific dynamic security code, is used to process your payment. So your actual credit or debit card numbers are never shared by Apple with merchants or transmitted with payment.It also doesn’t store the details of your transaction behavior. Your most recent purchases are kept in Passbook for your convenience. Apple pay currently has around 12 m patrons.
https://globenewswire.com/news-release/2016/10/25/882686/0/en/IoT-Device-and-Data-Security-Challenges-and-Solutions-Headline-the-Smart-Card-Alliance-2016-Security-of-Things-Conference.html : articles by Prof. Imran Hajimusa
Apple Pay has both secure element as well as HCE ( Host Card Emulation) i.e customer payment information is encrypted in the cloud, not on the phone. Therefore, the merchants see only the assigned virtual account number, not the actual card information Android Pay on the other hand has only HCE. This is one of the key differences between the functionality of Apple Pay and Android Pay.
Very informative post.
Contactless payment though in its initial stages is certainly gaining its ground.We need to see the extent to which retailers are willing to change their existing POS infrastructure.