Bank Innovation is out with a new report this evening, claiming that Apple will be utilizing tokenization technology in conjunction with NFC in its upcoming mobile payment service. Token tech is a favorite amongst financial institutions, as it’s considered to be extremely secure.
How it works is that instead of transmitting account and credit card numbers, tokenization sends complex codes over the air between devices. These codes are only used one time, so even if they are intercepted by a third-party with the intent of fraud, they would be of no use.
Bank Innovation cites both inside sources familiar with Apple’s plans, as well as previously-filed patents in its report. One in particular, filed in 2009 and granted last year, covers ‘secure communication between trusted parties’ using a token or certificate authentication method.
It’s been reported that Apple has agreed to take on some of the liability in mobile payments, in order to secure lower transaction fees from major financial firms. So it’s no surprise to hear that the company is pulling out all of the stops to insure its new payment service stays secure.
Apple is expected to unveil its new mobile payment service, alongside its new iPhone this Tuesday. In the run up to the event, the company is believed to have signed on a number of major partners, including 3 of the 4 big credit card providers, and several nationwide retailers.
For a roundup of all of our expectations for Tuesday’s event, click here.