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Fraudsters target banks associated with Apple Pay for illegitimate transactions

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Despite of infinite assurances and justifications by Apple regarding the security that it offers for its mobile payment service Apple Pay, it now appears that its much “secured system” might have some serious loopholes.

Recently, there have been a growing number of fraud cases encountered in Apple’s mobile-payment service and have highlighted that Apple’s Pay is not at all shatter proof and can be exploited.


The loophole lies in the verification process of adding a credit card and has been exploited by frauds a couple of times. While adding a card, Apple sends information such as the type of phone, the last four digits of the user’s phone number and the user’s general location to the issuing bank, which decides whether to provision the card for Apple Pay.

On failing to verify the details sent by Apple, bank sends additional security questions, which sometimes are so easy and eventually become the only factor for the fraudsters to exploit. In order to keep this glitch under radar and halt the ongoing fraud experiences by all means, banks have tightened their verification process and added extra security levels.

The glitch was uncovered by Cherian Abraham, a payment expert who works with banks and retailers on mobile-payment strategies. He added that around 6% percent of Apple Pay transactions are fraud cases which is way higher than 0.1% fraud transactions that happen with plastic swipe cards.


Since, the loophole happens to exist while verification process of adding a credit card, different banks have showed different fraud case ratios depending upon their security levels. Moreover, the glitch cannot be said to lie solely at Apple’s end since it depends on security levels that bank offers. Nevertheless, one loophole is enough to cripple down the whole system.

An expertise on the matter said that card issuers have been eager to join Apple Pay, and it’s possible that some didn’t provide enough training to customer-service representatives who handle authentication questions.

Apple yet assures its users of the security that it offers with its mobile payment service and looks forward to expand to other territories soon.

Apple Pay also seems to have a cloud on horizon with potential competitors coming in rapidly. Recently, PayPal struck a deal to purchase Paydient, a major mobile wallet tech developer and Apple Pay’s rival in all aspects.

Major retailers have been looking to replace Apple Pay ever since it launched. Corporate credit cards or prepaid cards are not accepted yet in Apple Pay transactions. Neither are retailers’ proprietary credit cards which provide a great deal of offers and discounts to its regular customers.

A major amount of revenue and sales is gained by these proprietary cards which forced major retailers into hesitations to accept Apple Pay in its full glory. Paydient might come to rescue for all those retailers and merchants.

Sunder Pichai, in his Keynote address yesterday, announced Android Pay, Google’s counter to Apple Pay. While Google Wallet failed to capitalise on even the minimalist traction it had gained, with Android Pay, Google is leaving it to the developers, to integrate the API and form their own payment systems.

The app’s (or API’s) biggest selling point is this availability as an API, rather than a fixed app like Apple Pay. Like Apple Pay, Google too will make use of Near-Field Communication (NFC) for payments.


Senior Writer

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