Posted October 21, 2014 2:23 PM by

Apple’s creativity —keeping info out of the hands of loss-prone merchants…


(CUSA) – We repeatedly hear of data breaches where consumers have had their personal information compromised, most recently Home Depot and Target.


This new Apple Pay system is unique because the critical information is held not by the retailer but kept only by your bank, reports Apple Insider:



Apple designed Apple Pay to use tokenization. Broadly speaking, tokenization replaces the actual credit card number with a special number for making payments.


Tokenization is not a new concept, but Apple’s implementation is reportedly far more secure and brings tokenization into the real world. Traditionally, credit card tokenization was an online-only affair and the token vault — a database that maps tokens to credit card numbers — was maintained by the payment gateway.


Apple has worked directly with credit card networks like Visa and American Express to move tokenization to their end of the chain, according to details of Apple Pay’s design revealed by POS provider Clover.


With Apple Pay, rather than receiving a card number, CVV, expiration date, and billing address from the customer, the merchant receives only a device-specific token and a dynamic, one-time-use security code. The token is translated into a credit card number only when it reaches the payment network, meaning that only the consumer’s bank and the payment network have information about both the person and the transaction.


Why are we telling you this? Because this is a terrific example of the use of technology along with creativity to serve the common good. Such a combination is only possible where free markets allow for collaboration and flourishing.


Apple continues to provide consumers with products that serve the needs of the community at prices they are willing to pay. Not a better example of the American Way in action. —DNW


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