Apple Pay is ‘U Pay’ when it comes to fraud
by: Henry Meier
This morning’s top headline in the WSJ is sure to get some attention: It breathlessly announces that Apple Pay “Is beset by low-Tech Fraudsters” It goes onto report news that I have seen floating around the blogosphere for the last few days, mainly that fraudsters are able to use old-fashioned low tech techniques,like using stolen credit cards, to sign-up for Apple Pay and make illegal credit card purchases.
In truth this news should surprise no one. What bemused me about the headline is that if your credit union has signed up to make Apple Pay available for your members-and if you haven’t you should give it serious consideration-remember that it is your credit union that it on the hook for “Apple’s” fraudster problem.
For all the frenzy surrounding it, Apple Pay is nothing more than a way of allowing consumers to make purchases without having to go through the hassle of taking their plastic out of their wallets. If your wallet is like mine this is a big deal. Credit unions and banks are signing up because they are correctly assuming that Apple has the ability to make mobile purchases as common as a song download. But this is by no means a win-win. Apple is taking a slice out of every transaction and your credit union not Apple is on the hook for the type of fraud that the Journal is writing about. If your contract with Apple is anything like the information that I have seen it makes it quite clear that the company is doing nothing more or less than providing a payments platform. It has no way of knowing whether or not a consumer is an authorized user. That is the issuer’s job.
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