Everything you need to know about Apple Pay in Canada

Apple Pay has launched in Canada, which means iPhone users can make in-store payments, and iOS 9 users in general can make in-app payments, using compatible devices.

Below are some answers to frequently asked questions about Apple Pay.

What exactly is Apple Pay?

Apple Pay is Apple’s take on mobile payments — with a couple of twists.

First, it allows users with compatible devices to pay for items with an iPhone at a regular credit card reader by using the existing tap-to-pay functionality of today’s credit cards. Because the iPhone has an NFC chip inside, users only have to place the phone near the terminal to make the payment. The transaction is authenticated using Touch ID, Apple’s fingerprint reader available in iPhones since the iPhone 5s and above.

Second, it allows Apple Watch users to make payments in-store by tapping the Watch against a compatible payment terminal. Instead of using a a fingerprint sensor, the Apple Watch relies on the combination of persistent authentication — the Watch on a user’s wrist — and a PIN code to ensure security.

Third, Apple Pay works like a digital wallet, storing credit card information in a secure locker to expedite payments inside compatible apps. Because Apple Pay also stores relevant addresses, it can easily facilitate shipments to a home or office address on top of the payment itself.

Which devices are compatible with Apple Pay?

Users can make in-store Apple Pay payments with the iPhone 6, iPhone 6 Plus, iPhone 6s, and iPhone 6s Plus, along with the Apple Watch.

Users can make in-app Apple Pay purchases with the iPad Air 2, iPad mini 3, iPad mini 4 and iPad Pro.

But my iPhone 5s has a Touch ID sensor. Why isn’t it compatible with Apple Pay?

Good question. While the iPhone 5s does have a Touch ID sensor, it lacks the NFC chip necessary to transmit payment data from the phone to the terminal. Sorry!

Which credit cards work with Apple Pay in Canada?

Apple partnered with American Express to launch Apple Pay in Canada.

That means all consumer and small business American Express cards issued by Amex Bank of Canada are supported. Prepaid cards, Gift cards and American Express-branded Scotiabank cards are not eligible.

Why isn’t Apple Pay compatible with Visa and MasterCards at launch?

Another great question, and not one we have to answer to right now.

But we can make some assumptions. Apple wanted to bring Apple Pay to Canada in 2015 — this we knew all the way back in February — but to do so meant negotiating with the big five banks. In order to protect themselves from the empire that is Apple, the banks reportedly banded together through a consulting firm, which acted as intermediary for an industry that cumulatively pulls some of the highest profits in the country.

According to various sources, the Big Five banks — TD Canada Trust, RBC, CIBC, Scotiabank, BMO — wanted to negotiate Apple to a lower per-transaction fee. In the US, Apple, which had considerable leverage with the disparate and highly decentralized banking system, reportedly negotiated a fee of 0.15 percent of each transaction, which cuts into the bank’s revenue from credit card purchases. Because Canada’s credit card lenders are fewer and more powerful, it’s possible Apple couldn’t reach an adequate agreement with all of them before the end of 2015.

The more likely scenario is that to simply negotiations, Apple intends to negotiate deals with individual payment networks such as Visa and MasterCard, and not the banks directly. While neither Visa nor MasterCard issue cards directly to consumers in Canada, financial institutions can leverage their power, but the payment networks still hold considerable influence. And because American Express operates a “closed loop” within Canada, operating as both a payment network and a direct-to-customer credit card issuer, Apple was able to quickly reach an agreement.

Finally, while Canada is just the third country in which Apple Pay is operational, it is a comparatively tiny market, and not the only one Apple has plans for. American Express is a worldwide operator, and the deal with the company extends to Australia, Hong Kong, Spain and other nations into 2016.

So does this mean Apple Pay will eventually support Visa and MasterCard?

In the short-term? Probably not.

But it’s a good bet the positive publicity for Apple Pay in Canada will have a halo effect on the rest of the mobile payments industry, including products currently being offered by the Big Five banks, forcing them to act by acceding to Apple’s requests.

TL;DR It will happen eventually. Be patient.

OK, fine. I’m one of four million Canadians with an American Express card, and have a compatible iPhone. But why would I want Apple Pay?

It’s true the Canadian payments industry is in no need of a complete upheaval like that of the U.S. We’ve supported chip-and-pin since 2011, all the way from the payment networks like American Express and Visa to the issuing banks, payment facilitators like TD Merchant Services and Moneris, and the merchants themselves, who would otherwise bear the liability of any fraud that occurs in their stores.

There are a few benefits to Apple Pay over competing mobile payment solutions on Android and BlackBerry 10, and over tap-to-pay processes on credit cards.

First, Apple Pay is built into the operating system, so there’s no need to open a separate app as you do with a supported banking app, or a third-party solution like UGO Wallet or SureTap Wallet. Apple Pay also natively supports the iPhone’s Touch ID fingerprint API, obviating the need to enter a separate PIN code.

Apple is also the first mobile payments provider to use a confluence of security protocols, such as unique device and transaction identification, as well as tokenization, which randomizes the associated credit card’s primary account number (PAN) so that in the event of a data breach or theft, the actual credentials are scrambled.

Second, when compared to a plastic credit card’s in-store $100 tap-to-pay limit, Canadians using American Express are only subject to the limits of the merchant’s card machine, or their own card’s credit limit, which is usually much higher.

So Apple Pay is secure?

Yes, mobile payment solutions are generally more secure than using a plastic credit card, since they require several layers of security to authenticate a transaction.

Apple Pay, Android Pay, Samsung Pay and many other mobile payment solutions not only require two-factor authentication — that is, a primary PIN or password, such as a lock screen, and a secondary method, such as an additional PIN code or fingerprint — but they tend to comply more quickly with the payment networks’ updated standards and practices, such as tokenization, than plastic credit cards.

Apple Pay also protects user data and confidential transaction details between transactions, too. Secure card credentials are stored in a separate chip called a Secure Enclave, which is encrypted and booted separately from the main system; and no transaction details are stored by Apple at all.

Apple’s Wallet app shows users their last several transaction, but those are provided directly by American Express, through a secure channel.

Apple continues to reiterate it is not in the business of siphoning user data for its own benefit, and there is ample proof of that claim’s efficacy in the lengths the company has gone to protecting user privacy.

Which stores currently support Apple Pay in Canada?

Currently, only a small number of stores officially support Apple Pay, but any business that has a payment terminal that supports both tap-to-pay and American Express will work with Apple’s new payment solution.

Officially, Apple is saying that the following stores are ready for Apple Pay:

  • Apple retail stores
  • Chapters / Coles/ Indigo
  • McDonald’s
  • Tim Hortons
  • Petro-Canada
  • On The Go (Esso)
  • Staples
  • Roasters

The following stores will soon support Apple Pay:

  • Aldo
  • TTC
  • Pizza Pizza
  • Delta Airlines

Which apps currently support making Apple Pay purchases?

The following apps support Apple Pay:

  • 1-800-Flowers.com
  • Apple
  • Beyond The Rack
  • Domino’s
  • Fancy
  • GroupOn
  • Hotel Tonight
  • Kickstarter
  • LivingSocial
  • Priceline.com
  • Starbucks
  • Ticketmaster
  • Uber

Where can I learn more about Apple Pay?

Apple has set up a dedicated Apple Pay portal, and AMEX has a page detailing the specific tenets of its deal with Apple.