Banks Ready to take on Fraud Liability in Apple Pay

Apple Pay, before its launch itself, has received backing from major banks such as Chase, Navy Federal Credit Union, PNC and USAA. These banks are all in praise of Apple’s highly secure payment process. Apple Pay is incorporating multiple security features which include Touch ID fingerprint authentication, NFC, Secure Element data storage and tokenization for transaction processing.

Top banking officials believe that Apple Pay has the potential to make tokenization a part of the standard banking model. Tokenized transactions basically replace credit card info with runtime generated Device Account Numbers. In the case of Apple Pay, this generated number is stored on the secure element and is inaccessible by iOS. When payment is initiated at point-of-sale, the token is decoded using the backend payment system and the customer information is then captured by the terminal.

Tokenized transactions would enable banks to identify Apple Pay transactions against traditional credit card transactions. Furthermore, USAA cited that it is ready to carry over the policies to Apple Pay which have been employed for credit card swipe payments. Chase and PNC have made confirmations on extension of full liability protection to their customers opting for Apple Pay. USAA has even gone ahead and announced that their customers can start using Apple Pay from November 7. It is the first banking service to have officially announced a release date.

Banking officials had revealed their consent towards Apple Pay in an exclusive interview with The Daily Dot. Eventually, banks would bear the liability for purchases (both face-to-face as well as in-app) made via Apple Pay. Apple Pay’s partner banks feel that the new payment system is secure enough to offer customers the same level of protection that they get with standard credit card payments.

Apple Pay is expected to roll out possibly as a feature in the upcoming iOS 8.1 maintenance update. A recent beta release of the firmware saw revelations on Apple Pay made by Hamza Sood, one of the developers. Yesterday, a Walgreens memo was leaked revealing that the retailer is set to launch Apple Pay on October 18th. Apple is holding a special event on October 16th at which it is likely to announce the official launch date.