Will Apple solve the credit card fraud problem?

“We have a number of mobile payment initiatives and products available to us in the U.S. but we’re still dealing with an outdated magnetic stripe system that’s easy to hack for data,” Kevin C. Tofel writes for Gigaom. “That’s partly why this country accounts for a disproportionately high amount of overall credit card fraud: Although we process only 24 percent of global payment volume, we account for 47 percent of the overall global fraud according to Businessweek.”

“Market politics is one big challenge. For example, I had high hopes for Google Wallet and NFC payments a few years ago but they were soon dashed,” Tofel writes. “I do have some hope though: Apple is reportedly looking at expanding into mobile payments in a way that would eliminate the magnetic stripe approach. The company already has hundreds of millions of credit card account information. And with the new iPhone 5s, it has a strong user identification process in the Touch ID fingerprint sensor.”

Tofel writes, “If Apple does provide a solution for this issue, I’ll welcome it with open arms. Yes, it means providing trust in Apple for all of that credit card data but if you’re an iTunes user, don’t you already do that today?”

Read more in the full article here.

Related articles:
Bypassing the credit card: Apple patent application reveals major financial system beyond iWallet – January 30, 2014
PayPal wants to partner with Apple in mobile payments, sources say – January 30, 2014
iWallet: Apple exploring expansion of mobile payments, sources say – January 25, 2014
Apple patent application reveals secure iWallet system with iBeacon – January 16, 2014
Apple’s revolutionary iWallet is coming – December 10, 2013
Apple could have 250 million iBeacon-capable units in the wild by 2014 – December 7, 2013
Apple turns on iBeacon to guide shoppers at 254 U.S. retail stores – December 6, 2013
Analyst: Apple to reach 600 million users with credit card accounts on file by year end – June 4, 2013


  1. In Europe they use a Chip in the card to reduce fraud. When making payments the customer swipes the card themselves (even at restaurants) using a mobile device and enter a PIN number to verify.
    I don’t know why here in the US this approach hasn’t been adopted. The credit card companies do not seem willing to make these changes to reduce fraud. The cost gets past onto us in higher fees.
    Several store chains are now getting hacked into so Apple have to be careful to ensure their security is better that than. They maybe targeted by hackers to test the defenses.

    1. I like the Euro-model and was surprised when the little scanner came to my table. In the US, the only thing that matters is profit — the mini-readers are an expense. The notion that security is worth the cost has occurred over here. Just look at all the really poor security out there highlighted by CSO magazine to see tons of examples.

    2. I’ve never understood why US credit card companies haven’t also adopted the chip & PIN system, it works really well here in Europe. Before that we used to have photographs laser etched on the back of the card to establish identity.

      With our bank cards, we also get issued with a tiny reader that looks like a credit card-sized calculator. For security reasons, it’s a stand-alone battery operated device that is not connected to your computer. When you use Internet banking, you put your bank card into your reader, enter the PIN and then the transaction details and it generates an 8 digit code that you type into the computer. The payment is then securely and conveniently verified.

      I’ve also discovered recently that those card readers are mostly interchangeable, so if you are away from home, you can borrow one from a friend and still make secure transactions on your account using their card reader from a different bank.

  2. Apple is not in a position to solve any credit card related problem simply because it is not in the business of processing credit card payments to merchants. Until and unless Apple works out a system of payment either in conjunction with PayPal or in tandem with the credit card issuing companies, it can’t solve any credit card fraud at the point of sale terminal.

    It strikes me as highly unlikely for the credit card companies to surrender payment processing control to Apple because they will want to retain the majority of the fees. They can’t even be bothered to instigate a cheaper way of preventing fraud by introducing a chip & PIN system so what chances are there that these fat cats will get off their asses to approve a new way of paying through iWallet.

    It’s a government mandated monopoly.

    1. Apple wouldn’t replace credit card companies, just solve their problem relying on magnetic strip cards.

      It would also eliminate the standard, but very stupid, practice of handing over your credit card to a waiter or waitress as they walk away to do who knows what with it.

      No one is going to hand over their iPhone to a waiter while they walk away with it.

      Android users are on their own. But not to worry, Samsung has a lot of experience coping whatever Apple does.

  3. Maybe Apple can master their own OSX and iOS before they tackle anything else. This said, for every engineer and software guru hired by Apple and the likes, there are equally talented people with bad intentions all over the globe that are getting far more wealthy by being part of the criminal element than abiding by the rules. This will never change whether Apple, IBM or any other company gets directly involved in trying to stem the tide on thieves that prey on unsuspecting credit card users, companies and processors.

  4. Luckily, as a non-American, I have i chip in each of my credit cards. So simple and safe. The card never leaves my hand. The only problem I see is that it still has the damn stripe on the back with all my info on it to allow use in ;the USA. American banks are not just holding back the security of Americans,; they’re holding back the security of the whole world.

    1. As an American on business in Europe, I went to buy a train ticket at Amsterdam airport. They do not accept American cards without a chip. Good thing I had a lot of cash. When Americans traveling abroad can no longer use their American credit cards, the card companies will have to change.

  5. This is diversionary BULLSHIT to turn attention away from the REAL culprits of this massive security breach: TARGET ET AL.

    IOW: Frack your lazy ass Target et al. Your red herring strategy isn’t working. PROTECT YOUR CUSTOMERS!

    That said, I’m all for an improved credit exchange system. Just DO NOT make it RFID, which is even LESS secure than the magnetic strip system. (And no, I won’t entertain arguments to the contrary. Been there, done that, beat your misinformed ass).

    I’m betting on the open source SQRL project, which you can read about here:

  6. Why would-I need to have a credit and share the details only because I have an iTunes account? I buy iTunes cards. They are often on offer and I don’t have to share further details with Apple. I love that system..

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