Apple Pay as Possible POS Security Fix

Target and Home Depot's recent data breach crises have left Americans questioning the overall safety of point-of-sale (POS) transactions. They're fearful of continued credit card fraud, and with almost 100 million total people affected by the two megastores’ hacks alone, who can blame them?

Many, however, view Apple's not-so-creatively-titled Apple Pay as the solution to a more secure checkout process. You've probably heard of it, but you may not know how it works, or why it brings the potential of safer transactions.

The new feature, found on both the iPhone 6 and Apple Watch, boasts a seamless process of initially connecting your credit and debit card information onto your phone, followed by simply scanning your phone upon making a purchase, eradicating the need for physical cards.

While Google actually beat Apple to this technology with Google Wallet, Apple Pay is the largest attempt to mainstream mobile payments, and retailers around the world are beginning to integrate mobile-scanning capabilities into their POS systems.

Mobile payment providers claim the technology is more secure than paying with credit cards, in large part due to encryption. The process begins by entering your credit card data onto your iPhone, which your bank account must verify as an extra security measure. Upon verification, Apple immediately encrypts your card's data and converts it into a "token" system, preventing your card's information from actually being stored on your phone.

This tokenization not only ensures that your card's data isn't stored on your phone, but it also prevents your data from being stored in Apple's servers or onto a store's database upon a transaction, eliminating most of the easiest access points for potential hackers.

NCR refers to Apple Pay as a "highly secure" method of payment. Features such as encryption and tokenization are very important for fraud safety as they greatly reduce your overall PCI liability and ultimately protect your business.

Aside from the token system, the iPhone 6's fingerprint scanner — although proven to be hackable — is another security plus, along with the fact that you can disable Apple Pay from your computer if your phone is lost or stolen.

Despite many recent large-scale data breaches, Apple Pay's mobile option is making it harder for hackers to find success, paving the way to a more secure transaction experience.

Carmon Drummond is the director of sales and marketing for MainSpring, an omnichannel retail management system for independent retailers.