Apple Pay Essay

Apple Pay
Background
Apple Pay is a new payment method which was announced on 2014 Apple Dev Conference. Apple Pay works on iOS 8 devices and makes payment at over 200,000 retail stores in the United States. Apple has to cooperate with credit card issuer and retail stores to make the payment happen. It works like middleman between credit card and retail stores and the customer to make the payment happen.
Although Apple Pay is not the first mobile payment method, the status of Apple explains the reason that Apple Pay became a hot topic even before its launch although. The power of the branding paves the way for Apple Pay to become a potential mobile payment market leader in the future. Apple is the second largest information technology company

The device will send the information to credit card issuer. The issuer will send back a cryptogram and token to iPhone. After that, credit card number will not be stored and used again. Instead, the cryptogram and token will be stored in iPhone and be used in the purchases.
Cryptogram is the transaction’s security key. If a customer wants to buy something with credit card, the chips embedded in the credit card and the point-of-sale terminal in the retailer. The cryptogram attach to the customer’s personal account number (PAN). The part of cryptogram is generated according to the data on the chip of the credit card which was made by the credit card issuer. The whole cryptogram in the transaction will be sent back to the issuer’s bank to processes the transaction. Instead of Apple the issuer of credit card is responsible for the quality and security of the cryptogram.
In transactions, apple pay will not only use a cryptogram, but a token as well. The networks of credit card issuers (e.g. Visa, MasterCard, American Express) will generate the tokens which, in the case of Apple Pay, will be a 16-digit number that looks exactly like a credit card number, but it generated dynamically. (KAR,

The weakness of iCloud will make Apple Pay exploited in the hacker’s attack. A singer factor of authentication, Apple ID password is enough for the hacker to get the data of an iPhone from iCloud backup. It’s also been proven that Apple ID accounts have vulnerabilities which could be hacked.
Another possible vulnerability of Apple Pay is the NFC transmission. Several years ago a former NSA analyst reported some serious vulnerabilities in the NFC system. At the conference of Black Hat, he showed how to hijack an NFC-enabled device by simply waving a tag with an embedded NFC chip. http://gizmodo.com/how-safe-can-apple-pay-really-be-1633065822 Efficiency
The customer only need to wave iPhone in front of POS terminal. The encrypted data will be transferred using NFC. All of the transaction will be completed in the seconds. Nor credit card number nor signature is required in the transaction. So it is a very efficient payment method.

Flexibility
Apple Pay only can run on iOS 8 devices. More than half of mobile phone users who uses Android system will not be able to use Apple Pay.