Apple Pay Access Not Easier for Hacking: Banks Security Need to be More Secure?

By Staff Writer

Mar 17 2015, 10:24 AM EDT

How secure is Apple Pay? Is it really a payment method that hackers cannot intercept like Apple claims it to be?

Let's see by looking at the good, the bad, and the ugly side of this payment method.

The good is that it's like no other existing payment method out there. Instead of using credit card numbers, Apple uses an encrypted virtual code that represents the owner's credit card information and store it in the iPhone's extra secure storing space called Secure Element. The owner can then verify it with thumbprint via the TouchID feature. PIN can also be added for security purposes.

Apple also claims that the buyer's credit card information is not stored on Apple's servers. This makes Apple not aware of what iPhone 6 owners that use Apple Pay unaware of what they are spending their money on. Likewise, merchants and cashiers do not know the identity of the buyer.

Simply put, the heavy encryption used for transmitting financial information and the lack of actual financial data should make Apple Pay a secure payment method.

The bad thing is, Apple Pay like other rival payment method is vulnerable to social engineering - "a term for the tactics hackers use to gain access to personal accounts by posing as the people whose identities they've stolen." This is the same tactic used for hacking Apple's iCloud which resulted in the leak of nude celebrity photos online last year.

By using widely known details about the celebrities, hackers were able to answer security questions and get through Apple's system. Hacker can use stolen information, too, of Apple Pay users and supply it during verification process conducted by banks.

This goes to show that this has nothing to do with the breach of the Apple system but more of an issue of bank security. Not to mention that it is banks that are alerted to potential red flags, such as hackers putting stolen credit card information on iPhone 6 handsets.

The ugly part of this is what Apple Pay users do not know. Apple does not reveal everything what happens during these transactions.