Digital wallet

Two 'Digital wallet' stories January 2014 - July 2015

Apple applies for patent for person-to-person payments, secured by Touch ID

When I suggested that Apple could in the future move beyond Apple Pay to become a bank, a couple of you observed that person-to-person payments might make a logical next step in that direction. It appears Apple may agree: Patently Apple notes that the company today applied for a patent for a method of transferring money from one iPhone to another.

Using electronic devices (such as cellular telephones) that communicate wirelessly, two individuals can make person-to-person payments. In particular, an individual using an electronic device may identify another proximate electronic device of a counterparty in a financial transaction, and may provide an encrypted payment packet to the other electronic device that includes: a financial credential for a financial account of the individual, a payment amount, and a payment sign.

The transaction would appear to take place in the Wallet app, and Touch ID would be used to authorize both ends of the transaction.

The user interface may display a prompt to the user to provide authentication information (such as ‘please touch the fingerprint sensor’).

Payments would be credited to a choice of “payment vehicles,” read: bank accounts and cards that can accept transfers from third-parties. The patent of course notes that all data transmitted between both the iPhones and the payment processor would be encrypted.

Timothy Hurley, Senior Director of Apple Pay Engineering, is listed as one of the inventors.

Apple keeps its options open with patent for iBeacon- & NFC-compatible secure payment system

While it seems likely that Apple is intending to eventually establish iBeacon as a wireless electronic wallet system, rather than the existing NFC system commonly used in parts of Europe and Asia, a patent filing published today incorporates both protocols. It also allows for other forms of Bluetooth payment.

The secure payment system Apple describes would work in much the same way as the chip-and-PIN cards which are well-established in Europe. Instead of transmitting your actual card details to the payment terminal, the card details are used to generate an encrypted code which is sent instead. The terminal is able to validate the code and identify the account without ever having access to the card details themselves.

As we always note with patent stories, Apple patents huge numbers of things, most of which never make it into products. But while Apple is adopting its usual wait-and-see policy where new technologies are concerned, the question of using iPhones for payment is almost certainly when and how rather than if.