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Apple Rolls Out Mobile Payments Service "Apple Pay"
Monday, October 20, 2014 6:10 AM

Today, Apple is rolling out its mobile payments service, Apple Pay. Apple CEO Tim Cook said that enthusiasm for the service has been huge, with 500 new banks partnering with Apple since the service was announced last month.

Apple unveiled Apple Pay with the launch of its new iPhones in September. The company has partnered with Visa, Mastercard, and American Express, along with several issuing banks, to allow iPhone users to store their credit card accounts. Apple Pay will be available in 220,000 US merchant locations that already take mobile payments via the NFC chip's short-range, secure wireless capabilities.

Mobile payments are a natural progression for Apple. The company already lets hundreds of millions of users buy music, books, and apps through an iTunes account linked to their credit cards.

Cook said last month that Apple's vision is to replace a wallet, and more specifically to replace antiquated, plastic credit cards. He noted that more than 200 million credit card and debit card transactions are processed per day in the US with consumers spending more than $12 billion every day between credit cards and debit cards.

The service works by allowing users to simply tap their iPhone devices to payment terminals and then touch their device's fingerprint sensors to purchase items. Both the devices and the terminals must have near-field communication (NFC) chips that store payment credentials—something that limits the service to new iPhone 6 and 6 Plus phones.

Apple Pay has another component that doesn't require an NFC chip but does need the company's TouchID. People now can pay for items in apps using a single touch on their device's fingerprint sensor, which removes the time and the hassle of entering credit card and address information over and over. Apple is adding this TouchID to its iPads.

It's not surprising that Apple would see potential not just in payments but in the mobile payments market specifically. The global market for mobile payments is forecast to be about $720 billion worth of transactions by 2017.