July 3, 2015
We send and receive money from our friends and family every now and then. Its cash, cheques, and bank transfers most of the times. And nowadays it is Venmo, Square cash and Google wallet transfers, a few times. What if you could start doing this, very securely, from your iPhone? Excited? Looks like Apple is.
Apple has filed a patent application titled, Person-to-Person Payments Using Electronic Devices, to the U.S. Patent and Trademark office. Apple has proposed using mobile devices to make payments between persons through various technologies like Wi-Fi, Bluetooth and near-field communication (NFC). Apple filed the patent on September 30, 2014 and credits Apple senior wireless software architect, Ahmer A. Khan, and Apple senior director of engineering, Timothy Hurley, for the invention. It got published yesterday - July 2, 2015.
It is clear from the patent application that it wants to target the pain points in P2P today. Background  says: "It can be difficult for individuals to directly conduct financial transactions with each other using their electronic devices. For example, credit-card transactions are typically processed by a payment network, and it can be complicated and time-consuming for individuals to interact with a payment network to conduct a financial transaction with each other. In addition, credit-card providers usually charge higher fees for financial transactions where there is no proof that a physical credit card was present. If two individuals attempt to directly conduct a financial transaction, they may face higher fees, which may discourage them from using their electronic devices to conduct the financial transaction."
It looks more like a proximity P2P payment system and might have remote capabilities as well. It actually talks about the process in which a user will launch a Passbook or wallet app, such as Apple Wallet to detect "nearby devices" they want to send payments to and plug in whatever amount they want to send. The payment would then be authenticated by multiple procedures. The patent application describes this method as being super secure. It has multiple levels of security built-in that includes (but is not limited to) fingerprint, secure element, encryption, other biometric techniques, tokenization, third party authentication systems as well.
Interestingly the patent also says that, apart from using the card on file with Apple (if it exists), it might allow bank apps to be used (if there is no card on file). "For example, if a user does not have a credit card (or a financial vehicle associated with a financial account) on file with the provider of the electronic device, the provider may allow a financial institution (such as a bank) to offer a payment applet with a prepaid amount to the user to encourage the user to use the electronic device to conduct financial transactions (such as mobile payments). If the user accepts the offer, the provider may provision the payment applet on the secure element of the user's electronic device."
Exciting times ahead!