Masabi, the leader in mobile ticketing and innovative fare collection for transit, invites you discover what the latest updates from Apple - Apple Pay - mean in the context of mobile ticketing, NFC and Open Payments.

1. Pay in Transit
A webinar exploring the potential
10 Oct 2014

2. Apple Pay
Agenda
Apple Pay overview
Is it new? Or just EMV?
Usage in mTicketing Apps
Usage in smartcard / Open Loop systems
What should you do?
Q & A

3. Apple Pay

4. Apple Pay
much more secure than

5. Apple Pay
Apple’s Wallet
Card details are only stored on the
handset
In dedicated memory called the
Secure Element.
Secured by Touch ID thumbprint.
Not synced with iCloud.
Ie. those 800m cards in iTunes need
explicit re-entry, per device.

6. Apple Pay
Adding Cards
Photograph a card to add it to the
phone.
Stored cards are managed in
Passbook
Alongside
barcode tickets, boarding passes
etc.

7. Apple Pay
Devices
2014: only iPhone 6 and 6+
Requires the Secure Element hardware
2015: older devices, if paired with a Watch
Secure Element is on the Watch

8. Apple Pay
“one time number”
“dynamic security code”
“cashiers no longer see
your PAN”

9. Apple Pay
So is it new, different,
unique?
Or just standard EMV?

10. Apple Pay
Paying With A Tap
Ensure phone is on…
1. Place thumb on Home button (for Touch
ID)
2. Tap on contactless ePOS unit
3. Performs a standards compliant EMV
payment
Magstripe mode (for US)
or
Full EMV contactless
None of this requires a network signal / cellular
data connection.

11. Apple Pay
Standard… with a Twist
Your iPhone doesn’t store the PAN.

12. Apple Pay
Standard… with a Twist
Your iPhone doesn’t store the PAN.
Secure Element stores a unique, phone-specific token
Digital Account Number (DAN).
Conforms to PAN spec, passing Luhn checksum; shares first 1 and
last 4 digits.
DAN is assigned by Payment Network
Visa Tokenization Service, Mastercard MDES.
Ie. not Apple specific; it’s a new EMV standard.

13. Apple Pay
Why?
DAN and PAN can be cancelled independently
Lose your phone – cancel the DAN, without also cancelling your
payment card.
Lose your payment card – cancel the PAN, DAN transparently
mapped to the new PAN.
DAN on its own is useless
Only valid with single-use EMV format cryptogram.
Backwards compatible – payment networks perform mappings in
background
Minimal overhead for ePOS vendor & issuing bank.

14. Apple Pay
What’s In It For Apple?
Not conventional transaction fees
They don’t clear the payment.
They can’t even track when payments are made (allegedly).

15. Apple Pay
What’s In It For Apple?
Not conventional transaction fees
They don’t clear the payment.
They can’t even track when payments are made (allegedly).
Allegedly banks/networks will give Apple a cut of interchange
fees made via Pay
0.15% of any transaction? (source: FT)
Apparently acceptable because Apple left the card companies “at
the centre of payments”
 …whilst ThumbID & Secure Element lower risks

16. Where Is It Available?
2014 – US only
Usable at 220k contactless ePOS systems.
 Ie. the supported vendors at launch are the US vendors who have
already got contactless ePOSs.
Apple Pay

17. Apple Pay
Where Is It Available?
2014 – US only
Usable at 220k contactless ePOS systems.
 Ie. the supported vendors at launch are the US vendors who have
already got contactless ePOSs.
2015 – staggered global rollout
Europe has 1.5m contactless ePOS systems
 However, payment networks still rolling out the DAN > PAN
detokenization infrastructure.
Turned off on non-US iPhones for now.
 Apple commercials may also be different; unclear.

18. Apple Pay
So… does it revolutionize transit?

19. Two Transit Usage Scenarios
mTicketing Contactless
Apple Pay

20. Apple Pay | mTicketing Apps
mTicketing Apps

21. Apple In-App Purchase APIs
StoreKit
Old.
For virtual goods
In-game micropayments
Etc.
30% fee
Apple clear the payment.
All handsets.
PassKit
New.
For physical goods
Including transit tickets.
No fees
Payment cleared through a PSP, as we
do today.
Just gives app access to a card stored in
the wallet.
iPhone 6 required.
Apple Pay | mTicketing Apps

22. Apple Pay | mTicketing Apps
Normal App Purchase Flow

23. Apple Pay | mTicketing Apps
Normal Purchase Flow

24. Apple Pay | mTicketing Apps
ApplePay Simplifies

25. Apple Pay | mTicketing Apps
ApplePay Simplifies
Replace 2 app screens with 1 Apple Pay screen
Eliminate all data entry

26. Apple Pay | mTicketing Apps
New Development Required
Add an ApplePay flow variant to your App
Must continue to support card entry for iPhone <6.
APIs available for use today in iOS 8.
Server-side changes – two choices:
1. Use a PSP that supports ApplePay natively
 Eg. Authorize.net, Chase Paymentech, CyberSource, First Data, Stripe, TSYS
 Pass them the token+cryptogram from the iOS API, instead of the PAN+CVV+expiry.
2. Apple: “The alternative is to provide your own server-side solution to receive
payments from your app, decrypt payment tokens and interface with the
payment provider”
 Unclear how that actually works, at this point…

27. Apple Pay
Contactless in Transit

28. Transit Smartcards?
Underlying contactless tech is standard NFC
(ISO14443)
Same as Oyster, ITSO, etc.
Currently not possible to load any other NFC
apps
Ie. no non-payment NFC functionality or
APIs today.
They may change their mind
 …but they aren’t saying either way
Apple Pay

29. EMV Open Loop?
Appears to support full EMV Contactless spec
Magstripe mode, with CVC3
Full EMV, with CDA(?)
 Some sort of “cryptogram”…
Should therefore work like a
normal contactless card
Could accelerate US adoption?
Open questions
Is offline fully supported
(magstripe counters, etc)?
Is speed acceptable?
 Looks slow in videos…
but all examples show online payments.
Apple Pay

30. Caveat
PAN > DAN tokenization impact:
Should still work on EMV compatible
hardware.
However, a physical card will appear
different from same card on an iPhone.
 …and different again on a different iPhone.
May have impact on daily/weekly caps
 Cannot use phone and card interchangeably.
Apple Pay

31. Apple Pay
Doesn’t Android
already do this?

32. Apple Pay
Android lacks:
Universal thumbprint security
Some have it.
No real impact for transit.
New DAN tokenization system
Support expected soon.
No real impact for transit.
Market making power in payments, transit.

33. Apple Pay
Android Device Market Share

34. Apple Pay
Android in JustRide (UK+US)

35. Apple Pay
So…
what should you do?

36. Depends on your System
Mobile Apps?
US: you should integrate
with PassKit soon.
RoW: you’ve got some time.
Smartcard?
Nothing has changed 
Apple Pay
EMV Open Loop?
US: you may have more
iPhone users soon than card
users
RoW: Americans may be
using on your system soon;
talk to payment networks…

37. Apple Pay
Any questions?