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Speaker: Bill Gajda – Senior Vice President Innovation & Strategic Partnership
We enable NFC and have been strong supporters of its adoption
“As you said, we have had a longstanding relationship with Apple. They are one of our strategic accounts. So we identified when we started the group. I think really at the heart of the new elements of the Visa/Apple relationship are the enablement of their NFC platform.
“I mean, Visa for the last several years have been a strong proponent of NFC in all of its forms. We were the ones experiment with microSD, with device fidelity, supporting all assumed base implementations. We were the first to publish the HCE implementation and Apple, obviously, with iPhone 6 and 6 Plus decided to implement NFC.
Visa/Mastercard are really the ones developing the technologies behind Apple pay
“we were concerned that in taking those credential off NFC and allowing them to flow through a payment app and into the cloud that we didn’t want that card information being exposed over and over again outside of that secure element. And so we developed not just for Apple, but for the industry, this tokenization solution, so when a user puts in their card information for the first time or when a bank provisions an exciting iTunes account on a new phone that that card information is replaced by a token. A token that’s bound to that device and bound to the Apple Pay Service, so really can’t be used even if it’s intercepted, it can’t be used away from that device or away from the Apple Pay Service.
They’re the gate-keepers too
“We had to say, no, to a lot of really innovative solutions, because most of them involve putting card information in the cloud on an app through the airways over and over again.
The token system is bound to the device
“we developed not just for Apple, but for the industry, this tokenization solution, so when a user puts in their card information for the first time or when a bank provisions an exciting iTunes account on a new phone that that card information is replaced by a token. A token that’s bound to that device and bound to the Apple Pay Service, so really can’t be used even if it’s intercepted, it can’t be used away from that device or away from the Apple Pay Service.
The token is at the heart of things
With tokens we can think really flexibly about what we allow and so at the heart of Apple Pay is our token vault that database that translates between a card number and the token number, and our token service that does the provisioning of that token for the first time, that manages the lifecycle. If the phone is lost or stolen, the ability to replace it a token, the ability to register someone to make sure that that person who is putting that card into their phone is a person who owns a phone and who owns a card, and so our combination of token vault and token service is really what we have partner with Apple with.
some banks may develop their own token vaults, but that will still be mirrored at Visa
“I would say that the large issuers, the very large issuers are developing their own token vaults. And so they will have their database that translates a PAN to a token, but all of that information is sent to Visa to our token vault and mirrored that, because we have to provide that token service and do that translation when a transaction occurs.
So, I think for a handful of banks, they will have their own vault and do that translation, but for the vast majority of banks, they will use both our token vault and our token service.
Apple pay is the first tokenized solution
“I mean, a lot of wallets in the efforts to secure the transaction uses proprietary token solutions. And they have been around for few years. The first implementation of our token solution is Apple Pay. And everyone should remember that that token service is based on our token standard that American Express, Visa and MasterCard announced together. And so we’re all using fundamentally the same global tokenization service.
Apple Pay is the first. You’re going to see other tokenized solutions early in 2015. You are going to see our token services going to be available internationally early in 2015.
The industry is behind this effort, it’s now about getting the merchants on board
“I would say most of the heavy lifting has been done. It’s now working with the next third parties, the big merchants, the wallet providers, the issuers in the markets to launch these services.
I think customers will use it
“I think the customer experience, the ease-of-use, the ease of onboarding, because the way we work with Apple to define the system. I think will drive people to want to use their phone at the point of sale. There’s two barriers, customer adoption, registering their cards, getting provision, et cetera, and of course, there is still the acceptance barrier.
We need to grow NFC acceptance in United States.
Going to see more value add offers with Apple pay
“I think we are going to see as Apple pay evolves or as this HCE or NFC wallets evolve, more and more links to value-added offers, loyalty coupons targeted offers because of what we can do with the network…So it won’t just be payment. We are going to have a lot of loyalty based programs as well, supported in these wallets.“
We don’t need a physical checkout anymore
“a lot of these solutions that are out there that are transforming the point of sale. Most of aren’t just changing the point of sales or mobile point of sale or changing this big register to the small digital configural register. They are just saying actually we don’t need a physical checkout. We just need to know you are in the store. You can pay in an app and walk out, right. And so we think in app payments is going to be a huge development.”