April 28, 2015
Apple Pay already supported cards that represented roughly 90% of the credit card purchase volume in the US. Now it seems Apple wants to take this to 100% with Discover getting on the Apple Pay bandwagon.
Discover has announced an agreement with Apple that will allow Discover cardmembers in the U.S. to make contactless payments in participating stores through Apple Pay - the easy, secure, and private way to pay, using iPhone 6, iPhone 6 Plus, and Apple Watch. As part of the agreement, Discover Network will enable eligible financial institutions, including Discover Debit issuers, to let their card holders use Apple Pay.
Discover credit card members will still receive all of their current benefits, including Cashback Bonus and the new Freeze It security tool that allows them to stop any new purchases, cash advances, and balance transfers when they temporarily misplace their cards.
When cardmembers add their credit or debit card to Apple Pay, the actual card number is not stored on the device or on Apple servers. Instead, a unique Device Account Number is assigned, encrypted, and securely stored in the Secure Element on the device. Each card transaction is authorized with a one-time unique dynamic security code (tokenization), instead of using the security code from the back of the credit or debit card.
In addition to paying in stores with iPhone 6, iPhone 6 Plus and Apple Watch, millions of Discover cardmembers can also use Apple Pay with iPad Air 2 and iPad mini 3 when paying for goods and services within apps beginning this fall. By roping in Discover, Apple Pay will now support all major credit cards in the US.
Apple is trying hard to further increase its share in the mobile payments market. By the end of last December, Apple Pay accounted for only 1.7% of mobile payments market. Apple wants to increase this number rapidly, as it is poised to face further competition from other tech giants such as Samsung. Apple also launched Apple Watch to add another platform to Apple Pay and gain a wider consumer base. Apple also released numerous payments and commerce apps for its smartwatch. With the US market in tow, the challenge ahead for Apple Pay is international expansion.
Apple Pay has also roped in the retail giant Best Buy as its latest supporter from the MCX consortium.