Biggest Apple Reveal Might Not Have Been Its Phones Or Watch

Alongside new iPhones and the Apple Watch, the company revealed Apple Pay at its event Tuesday. Some say this idea might be the biggest game-changer.
Posted at 3:57 PM, Sep 10, 2014

iPhone 6, iPhone 6 Plus and that wearable we've been waiting for — the Apple Watch — were the stars of Tuesday's announcement in Cupertino, California. But there was one more thing.

TIM COOK VIA APPLE: "You may have blinked and missed it." 

Apple CEO Tim Cook is talking about Apple Pay, a new mobile payment system from the company.

TechCrunch tested the service Tuesday and found, "The system works as fast as they joked it did on stage." Here’s how.

You hold your shiny, NFC-equipped iPhone 6 near a pay station, and Apple Pay will pop up, showing you your most-used card. From there, you use Touch ID to authenticate and purchase. (Video via The Verge)

This feature works the way we were anticipating, and quite frankly, the experience of paying doesn't seem all that different from similar services.

Like Google Wallet, which has been trying to get us to ditch our cards since it was introduced in 2011.

So what is it about Apple Pay that has an analyst with Piper Jaffray saying: "The phones are impressive. The watch is a great starting point. But I think what they're doing in payments is going to be game changing."

Some outlets are pointing to Apple's extensive list of launch partners. Major brands, including Macy's, Subway, Walgreens and Whole Foods, will all support Apple Pay. Those and others represent "over 220,000 merchant locations across the US that have contactless payment enabled."

You'll even see Apple pay online and in iOS apps, like Target's, where you'll be able to tap to buy a new pair of headphones as easily as you can a new song on iTunes.

Other key partners include major credit card companies Visa, Mastercard and American Express.

The decision to partner with card companies rather than try to beat them is an interesting one. Business Insider points out Apple could have set up a system that linked directly to bank accounts, but "At this stage, having the ability to pay using your iPhone might be a nice additional feature but it's unlikely (yet) to be the major selling point."

Apple Pay instead hooks up to your individual credit cards, allowing you to pay with whichever card you have entered. But the service does not actually use your specific card number when you touch-to-buy.

EDDY CUE VIA APPLE"We create a device-only number, and each time you pay, we use a one-time payment number along with a dynamic security code."

The company says this will reduce the potential for fraud since no one involved in the transaction will be able to see your actual card number.

And if you're worried about Apple stealing your data, it says, don't be. The company says it doesn't track your purchase history.

But Bloomberg cites an unnamed source who says Apple will get something from your transactions. "Under deals reached with banks individually, Cupertino, California-based Apple will collect a fee for each transaction."

BuzzFeed, which called Apple Pay the most important news from the event, noted the timing of the announcement is spot-on. It says many merchants are in the process of updating their registers with NFC to process "chip-and-pin" cards before an October 2015 deadline.

Apple Pay, however, has an October 2014 deadline. It will come standard on the new iPhones and even work with the Apple Watch after launch in early 2015.