Safe to use Apple Pay? What if I lose my iPhone?

Reader Randall Heng wrote in to askST about using Apple Pay. "What happens if I lose my iPhone? If a fraudulent transaction is made, who is liable for the loss? Apple or the issuing bank?"

Tech Editor Irene Tham has the answer.

Almost all credit and debit card users in Singapore can now tap and pay with their Apple devices.

Five major banks - POSB, DBS Bank, OCBC Bank, United Overseas Bank and Standard Chartered Bank - signed up to the Apple Pay e-wallet system last month. It was launched here in April, but its use then was limited to holders of American Express-issued cards.

As users here try out Apple Pay, some are asking this question: What happens if I lose my iPhone?

Do not worry. The security of your plastic card will not be compromised.

But you have to observe some basic hygiene. For instance, you have to turn on the "Find My iPhone" feature under iCloud in Settings. This is to allow you to remotely lock the Apple Pay feature in the event that your phone is lost.

First things first, the 16-digit number on the card is not saved on the phone. What is stored instead is the encrypted version of a unique digital identifier, created based on the actual credit card number.

This means there is also no need to call a bank to deactivate a card. You just need to turn on "Lost Mode" under "Find My iPhone" in your iCloud account to deactivate Apple Pay.

Some have also asked if a third party could extract credit card information through decryption if the phone is misplaced or stolen.

The answer is no.

Your physical credit card information cannot be reverse engineered from the unique digital identifier in the phone. Moreover, your fingerprint is needed to authenticate every transaction. And the fingerprint data is not stored in the phone at any point in time.

Another common question: In the event of a fraudulent transaction, is Apple or the issuing bank liable for the loss?

Apple does not store any card or personal data. The bank will investigate any claim of fraud via Apple Pay in the same way as it would for a lost physical credit card. It is also worth noting that credit card information is retained by the card issuer at all times.

For those who are wondering how to get started, here's a quick guide:

First, add your card details to a digital wallet stored on the iPhone, iPad and Apple Watch. Supported devices include the iPhone SE, iPhone 6, iPad Pro, iPad Air 2 and Apple Watch paired with iPhone 5 or later. Setting up is easy. After selecting "add a card", just position the credit card you want to add in the picture frame on screen. The 16-digit number will be automatically captured to generate the unique digital identifier. You will be asked to enter the card's expiration date and CVV number.

The bank which issued the card will send an SMS with a six-digit code, which must be entered into the set-up screen.

Second, only Visa and MasterCard credit and debit cards issued by the five banks can be added to Apple Pay. American Express cards issued by the same banks are not supported.

Card holders can make payments via Apple Pay outside Singapore. But there is a $100 cap on most transactions, especially those in Singapore.

This article was first published on June 4, 2016.
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