Apple Pay is missing an essential feature that it needs to stop people using other mobile payments apps: P2P. But, according to media reports, it looks like Apple is planning to change that.
First, the user opens their Wallet app, chooses which of the credit cards stored there they want to use to make the payment, and type in the amount they would like to pay. The payment can be authenticated using a fingerprint or the iPhone’s passcode. The system would also let the person paying pick the recipient from nearby iPhone users. Then, an encrypted payment “packet” is sent to the person receiving the payment, including the payment amount, verification and a payment “credential,” which could represent the sender’s credit card details.
Apple Pay is pretty hot on payment security already. When someone makes a purchase with Apple Pay at a store, they don’t actually share their card details with the retailer. Instead, a “token” which corresponds with their account details is issued to authorise a payment.
A third party — the user’s bank or credit card provider — would complete the transaction, and the payee would get a notification to tell them the payment had gone through successfully.
Apple wants the Wallet to be the one place for all your credit and debit cards, reward cards, boarding passes, tickets and more, and eventually replace your physical wallet. The system Apple just patented would also let you make a payment from a gift or other prepaid card.
There are a lot of person-to-person payment apps in circulation already, like Venmo and Square Cash. PayPal lets people pay both friends and merchants in stores, but still isn’t dominating mobile payments, which seems to be Apple’s plan.
However, Apple doesn’t always create the technology it patents, and could just be trying to stop a competitor using the same type of system.