Did Apple End the Retail POS Data Breach Fiasco?

Tech giant Apple had a big day early this month, when it held a massive press event unveiling a variety of new products, including the iPhone 6 and 6 Plus, Apple Watch, and Apple Pay, which is a brand-spanking new mobile payment system.

Though much of the hype was focused on the release of the iPhone 6 and Apple Watch, Apple Pay drew significant attention from the online retail privacy and security world. Retail point of sale (POS) data breaches have been an ongoing, seemingly neverending, problem that has affected a number of retailers and consumers. However, the Apple Pay announcement may just be the solution needed to finally resolve this issue.

What’s at the root of this problem? The inherent infrastructure of retail POS systems is deemed by many security experts as unsound. The magnetic strip technology in credit cards is outdated — it dates back to the 1960s — whereas the POS systems that process them utilize technology dating back to the 1990s. In comparison, hackers have an edge by using current technology, as evidenced by a recent wave of security breaches among major retailers such as Target and Home Depot. The POS infrastructure, in other words, is simply outgunned.

In other countries, a system known as Europay, Mastercard and Visa (EMV), or “chip and pin,” has been used with great success for years. This technology is newer, and far more secure. The cons? It’s expensive to implement and may slow down transactions, which causes many to view it as a hassle. The primary reasons this technology isn’t seen in the United States is that many banks and credit card companies view the cost and risks of loss related to EMV technology as outweighing costs and risks of lost from thefts.

Several consumers have lobbied for retailers to implement EMV technology in the United States following the retail POS data breach crisis. However, the chances of that happening are unlikely.

Though some have tried — unsuccessfully — to implement mobile payment systems, retailers are not willing to invest in new technology until consumers are more willing to take advantage of it, while consumers’ willingness to use the new technology depends greatly on retailers who make it easy to do so. Mobile payment systems are similar to Bitcoin in that they spark curiosity, but fear of the unknown make it difficult for people to take the plunge.

Thankfully, there’s an app for that. By having Apple Pay capabilities standard on all new iPhone models, Apple has seemingly solved this dilemma overnight. Retailers now have the advantage of being confident that a larger percentage of their customers will be enticed to use Apple Pay, giving them incentive to support and integrate the new payment infrastructure.

Though still in its beginning stages, it seems as though Apple Pay will become a viable solution to data breaching.