If you didn’t have your credit card number(s) stolen in the recent weeks by the hackers who got into Target and Home Depot breaches, you’re lucky. Hackers Apple Pay could make these kinds of breaches a thing of the past.
Hackers used infected payment terminals; card info is stored unencrypted in the terminals. Apple’s new Apple Pay, announced on September 9th at the launch event, will use NFC technology combined with Apple’s Touch ID, and eradicates the vulnerable credit card and debit card magnetic stripe interface and exposed numbers. Instead, the system will use a 16-digit proxy that is stored in a security chip in the device. That number, or token, is what is given to the retailer when you buy something, which means your actual credit or debit card number isn’t passed around. The retailer then sends the token using the payment network to American Express, MasterCard, or Visa; they then pass it to a third party that converts it to the original card number and sends it back to the issuer. The merchant nor the retailer’s payment network never see the real card number. Each token can only be used once.
