Apple’s mobile payments service may use tokenization technology

We may finally have a reason for why Apple Stores and some other stores are installing new NFC payment hardware ahead of the iPhone 6 launch. Apple is reportedly planning on implementing a security feature called tokenzation in the system, which removes the necessity to transmit account numbers or other critical personal details wirelessly. This tokenization system employs secure codes become useless after being used once. That boosts security by ensuring that any information captured by nefarious third-parties doesn’t give them access to your account or money. However, not all NFC payment terminals can accept this type of payment.

Apple may be integrating tokenization technology in its forthcoming mobile payments solution, reports Bank Innovation. Citing sources close to the matter, the report notes that the company will look to utilize token technology to address security and fraud concerns as integrates the service with the iPhone 6 and iWatch. “Financial institutions — card issuers and networks — prefer token technology because it replaces primary account numbers, those 16-digit card numbers on the front of credit and debit cards. Instead, the tokenization technology uses complex codes that are easily transmittable over the air and between devices, but that are used only once, so even if they are intercepted, are of no use to fraudsters.” An Apple patent discussing token technology has also been discovered, as the application was granted last month and filed for in 2009. In its example, Apple discusses a token system as a method for two devices to communicate sensitive data with disposable, one-time use codes. The report also once again discusses the NFC capabilities in the iPhone 6 and iWatch, stating that chip-maker NXP will be rolling out NFC chips to the iWatch and the iPhone 6. Apple Stores and Apple retail partners are also said to be gearing up to utilize NFC technology, as a number of retail locations will be using the NFC-enabled Verifone MX 915 terminal.