Gadgetory

all right so apples Apple pay lets you place your finger on your phone and then like wave it at payment terminals to buy stuff it's basically magic just like everything that they do but for folks who want more than the bippity-boppity-boo Harry Potter explanation you might be asking questions about exactly how all this works and especially whether Apple's claims with respect to transaction security can be believed but let's start with a brief rundown of how a regular credit card transaction works whether you swipe chip or wave financial institutions apply to join a card network like Visa or MasterCard putting them in the business of issuing cards to individuals and businesses and/or the business of acquiring merchants or stores to accept payments through the network from the aforementioned individuals and businesses when you use your credit card your issuing Bank receives the merchant ID card information and transaction amount to check for fraud then approve or decline the transaction if it's approved the money you just spent flows from your account through a payment processor that the ducks what is known as an interchange fee usually in the neighborhood of two percent for card-present transactions and significantly more when the card can't be presented like online that is divvied up between your bank or whoever your credit card issuer is to cover the costs associated with acquiring customers fraud expenses and profit and then a much smaller portion to the network like MasterCard or Visa now let's look at how Apple pay differs the NFC short-range wireless communication technology is the same as you'll find in millions of plastic cards and Android phones already worldwide but the back end is where Apple has actually innovated here instead of handing your card and ID to a stranger in a random store effectively giving personal information to the cashier and financial information to the merchant Apple authenticates your personal information with your credit card network once when you take a picture of the card to get it for Apple pay then they get a token called a device account number that is tied to your particular phone or watch and a key generator that creates the single-use security codes that are generated at the time of each transaction to be sent back to your issuer to decrypt and author as your payment Apple sends this token to the users phone that stores it in a special secure memory and execution environment called the secure element and according to them once this is done even they cannot retrieve the payment details so that's how it works Apple hasn't become a bank or anything and they actually never even touch your money or payment details during your day-to-day transactions so what's in it for them you might ask well unlike the also NFC based Google Wallet which is more of an open yeah you can join if you want to whatever initiative from Google Apple pay is the product of closed room deals with the financial institutions that reportedly entitles Apple to a small cut of the interchange fee because they again reportedly argued that easier transactions will drive customers to pay electronically rather than with cash increasing the total interchange fee bucket for everyone involved and they also argue that fingerprint authentication although it's far from perfect will reduce fraud where customers are using NFC enabled iPhones or Apple watches paired to supported devices to make payments meaning that less of that interchange fee will be used to reimburse well the victims of fraud so this as fast as possible not thorough as possible and while I did mention Google Wallet in this video and I did mention that it's also NFC based there are some very significant differences between it so let me know if you guys would be interested in seeing a standalone follow-up video that also includes some information about the pros and cons of Apple pay and Google Wallet and then the upcoming currency so just a general one about digital wallets love to see your comments guys and speaking of loving to see your comments so that was an awkward segue I mean I've got a haircut it's a completely different day I'd probably look entirely different and all that stuff but not nearly as awkward as the thing that you're about to see today sponsor is fractal design and they have cooked up a humiliating thing for me to do once again this is a banana and I think you guys know what those are for you're wrong yes what person fertilizing doing firms to fulfill their engine design no I guess that's it laughter mmm wrong duct tape ruin this alright guys thanks for watching like this video if you liked it dislike it if you just like to leave a comment letting me know if you have suggestions for future episodes the fastest possible just like this one and as always don't forget to subscribe and Josh man really dude