Money & Career

What you need to know about Apple Pay

By: Jill Buchner

CNW Group/CIBC - Corporate Author: Canadian Living Credits: CNW Group/CIBC - Corporate

Money & Career

What you need to know about Apple Pay

By: Jill Buchner
Chances are you already do your banking online, but your finances are about to get even more digital. In 2015, Apple introduced a digital payment service called Apple Pay that allows you to pay for purchases at stores across the country with your iPhone or Apple Watch—no more reaching for your debit or credit card. Until recently, it's only been available for American Express users in Canada, but as of June 1, 2016, any ScoatiaBank, TD Canada Trust, BMO, RBC, CIBC, Canadian Tire Bank, ATB Financial or Interac cardholder can access the service. Not sure what this means for your money's security? We asked Jennifer Bailey, vice-president of Apple Pay, how the system works, what happens if your phone is lost or hacked and why Canadians should be excited about this new service. Here's what you need to know about Apple Pay.

What is Apple Pay?
Apple Pay is a mobile payment service that lets you make a payment with your credit or debit card without presenting your card. Instead, you tap your Apple Pay-enabled iPhone or Apple Watch, which respectively use fingerprint technology or a password to ensure that you're the one making the payment. "The things we've focused on with Apple Pay are the security, the convenience and the privacy of payments," says Bailey.

Where can you use it?
You can pay with your iPhone or Apple Watch at any contactless payment terminal. That means, if the "tap" function is available for your credit or debit card, you can just use your phone instead. But if the machine still requires you to swipe, you'll have to get out your physical card, and some banks will be limiting transactions to $100 or less. "We have research that shows that over 25 percent of the payments in Canada last year were contactless or tap payments," says Bailey. That means many of us are already using convenient tap payments, and many retailers are making them available. "We think that will continue to grow as more people use mobile payments," says Bailey.

How do you use it?
To use Apple Pay, you need to have an iPhone 6 or higher, or an Apple Watch. To get started, you set up Apple Pay in your Wallet app, which is automatically available on the phone. You'll need to load any credit or debit cards you want to be able to use. Then you verify your identity with the bank (depending on your bank, this can be done in an app via security questions, on the phone, or using a password that's texted or emailed to you). In all, it takes a few minutes to set up.

What happens when you want to make a payment?
When paying for an item, you simply place your finger on the home button (so your iPhone's Touch ID can read your fingerprint) and hover your phone over the point of sale terminal, like you would with a tap-enabled credit card. "It talks to the terminal," says Bailey. You don't need to open any apps on your phone. If you're using an Apple Watch, simply double-click the side button and hover the watch screen over the terminal. Since you enter a passcode to verify your identity every time you put the watch on, you don't need to re-enter any verification unless you remove the watch.

Can your phone be hacked for your credit card info?
Hackers are becoming more and more sophisticated, so Apple added a couple of layers of protection. First of all, none of your credit card or banking numbers are actually stored on the phone, so they can't be stolen from your phone. Bailey explains that, when you enter that information, a sort of virtual credit card number, called a token, is developed that's unique to you. That token is stored on a secure piece of hardware in the phone that she describes as "a vault for payment information." Even if someone did get their hands on this token, they wouldn't be able to use it, says Bailey. That's because, in a second layer of security, a unique code is generated every time a payment is made. "That code goes along with the payment credentials up to the network and the issuing bank so they can check to make sure that it's actually coming from your phone or from your watch," explains Bailey.

But what happens if your phone or watch is lost or stolen?
If you find yourself panic-stricken without your phone, you can find some relief in the fact that your payment info is safe. Since you need to authenticate your identity (by using your fingerprint for Touch ID on your phone or entering your passcode on your watch), no one else should be able to make a payment on a stolen phone or watch. Anytime your watch is removed from your wrist, it relocks, so any new user needs to type in your passcode to use it. In that way, it's more secure than a lost or stolen credit card.

When your phone is lost or stolen, you can also use the app Find My iPhone to wipe the payment information or suspend all payments, so your credit or debit cards can't be used. Alternatively, like with a stolen card, you can call your bank to cancel the card.

And what happens if you lose your physical credit or debit card?
Anyone who's ever lost a wallet knows how helpless you can feel without any money or credit cards. In this case, Apple Pay can help. Whether you just discovered your purse was stolen and need a way to pay for a cab home or you forgot your wallet when meeting a friend for lunch, you can still pay as long as you have your Apple Watch or iPhone and contactless payment is available. In fact, after reporting a stolen card, Bailey says that you can still use Apple Pay in the days that you're waiting for your new card to arrive. "A lot of people have these great stories saying Apple Pay saved me, because I lost my physical card and the bank said it was going to take three days to get me a new card, but I could still use Apple Pay."

Can anyone else see your transactions?
Only you, the merchant and your bank can see what you paid. You can see a record of your transactions in the app, which can help you track spending and give you peace of mind that no one else has made payments with your phone. Apple doesn't see the transaction at all, so you don't have to worry about them selling your data to a third party. "We don't get the data. We don't store it on the servers. We don't profile you," says Bailey. 

Is payment going to go digital-only?
"Our goal is to replace the wallet," says Bailey. Pretty soon, you could leave your house with nothing but your phone and your keys. Already, the iPhone Wallet app allows you to store tickets, boarding passes, coupons and some gift cards digitally. Come June, your digital credit card and debit purchases will also extend to some in-app purchases, like in Uber. And the company is working on extending the Wallet's reach to include public transportation passes as well.

Ready for your finances to go digital? Her are 15 free budgeting and banking apps that can help you earn and save money. 

Last updated June 1, 2016. 
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Money & Career

What you need to know about Apple Pay