Target, U.S. Bank to offer Apple's new mobile payment system


Some Minnesota-based companies are among those buying into Apple Pay, Apple's new mobile payment system that was unveiled at Tuesday's launch event of new products.

Apple Pay lets consumers make purchases by touching the soon-to-be released iPhone 6 , iPhone 6 Plus and Apple's smart watch to a receiver device at the checkout counter, as well as through mobile apps and the iTunes store.

The new Apple products will allow people to store their credit card data in Apple's Passbook, which already has the ability to store loyalty cards, tickets for flights, games and concerts, among other things.

The tech giant has already lined up deals with six major banks, including San Francisco-based Wells Fargo, so consumers can use their debit or credit cards with Apple Pay once it launches next month. Among the banks that will be able to use the service later this fall is Minneapolis-based U.S. Bank, the bank said in a news release.

Some of the leading retailers, which already offer contactless payment in stores, will support Apple Pay. Such stores include Macy's, McDonald's and Walgreens, according to a news release. Apple says more than 220,000 stores already accept this type of mobile payment and it's working with more to integrate it.

Other retailers, such as Minneapolis-based Target, will use Apple Pay with their mobile shopping apps.

In a news release Tuesday, Target said customers using Target's app on the iPhone 6 and iPhone 6 Plus will be able to make secure payments without the hassle of entering account or billing information.

Mobile payments

Other companies have tried to get mobile payments off the ground – Google Wallet, PayPal, Square Wallet, LevelUp – but they never really caught on.

“None of those products ever made it into the mainstream because they face the same problem that payment card companies face. They must have acceptance to be valid. Meaning, if people don’t carry the card in their wallet and use it at places that will accept it as a form of payment, they are sunk. I didn’t see the uptake of those programs like I believe we will with Apple Pay," Dr. Branden R. Williams, EVP, Strategy, Sysnet Global Solutions, who co-authored the book PCI Compliance, told Forbes.

Mobile security

Apple says Apple Pay is the next step in reducing fraud because when using the mobile-payment system, a cashier or merchant can't see your name, credit card number or security code.

Apple says:

"When you add a credit or debit card with Apple Pay, the actual card numbers are not stored on the device nor on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on your iPhone or Apple Watch. Each transaction is authorized with a one-time unique number using your Device Account Number and instead of using the security code from the back of your card, Apple Pay creates a dynamic security code to securely validate each transaction."

Even though Apple has pitched the product as a way to protect personal data, recent data breaches, which include Apple's iCloud getting hacked and breaches at multiple partners who have signed on to use Apple Pay, such as Target, has people questioning how secure electronically stored data really is, the Washington Post notes.

Quartz, an online global news outlet, writes about Apple Pay security, saying, "As for security, well, one of the chains participating in the Apple Pay rollout is Target, which has to be paranoid about such things after last year’s massive data breach. So if they’re comfortable with Apple’s approach, that’s probably a good sign."

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