Pub. 2 2014 Issue 4

fall 2014 15 procedures and do a risk assessment on Apple. Bear in mind that there are not any specific disclosures banks would need to provide to customers since they contract directly with Apple. Even with proper due diligence and third-party vendor man- agement, security risks still remain when allowing a third-party vendor to use cus- tomer information. However, banks are insulated from most of the risk because customers would be providing informa- tion directly to Apple. Who Cannot Use Apple Pay Apple Pay is only available through the most recent iPhones, the iPhone 6 and iPhone 6 Plus models, which were released in September. Additionally, certain retailers like Rite Aid and CVS block Apple Pay payments, supposedly because they intend to offer their own mo- bile payments system. Other retailers, like Target and Whole Foods have already set up Apple Pay receiver devices at checkout terminals. Apple’s terms and conditions state that these cards are not eligible for Apple Pay: cards enabled for ATM access only, issuer gift cards, Health Savings Account cards, cards not issued for personal, family, or household purposes, cards that access a home equity line of credit, cards issued on Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933, visit compliancealliance.com or email info@compliancealliance.com. Attorney advertising material. Focused on Finance. Invested in Utah. • Commercial Lending • Mergers and Acquisitions • Consumer Finance Litigation • Bankruptcy, Restructuring, and Workouts • Real Estate and Environmental Law • Securitization and Structured Finance • Securities and Regulatory Compliance • Tax-Exempt/Taxable Bond Financings 201 South Main Street, Suite 2000 Salt Lake City, Utah 84111 801.533.0066 chapman.com Talk to us about your next project. James C. Burr Adelaide Maudsley 801.536.1447 • burr@chapman.com 801.320.6731 • maudsley@chapman.com “Apple bills the new payment system as a permanent and more secure replacement for your checkbook, plastic cards and wallet.” behalf of issuer non-consumer customers, such as a card issued to disburse govern- ment benefits or court-ordered payments, and flexible spending account cards. Looking Forward Apple Pay will not replace checkbooks and wallets anytime soon with its cur- rently narrow base of iPhone 6 users. However, Apple Pay has at least set a precedent, as Apple rivals are already try- ing to release other pay systems that will work with any smartphone with added benefits, such as customer incentives. While Apple Pay works with most major credit cards, many from smaller banks would also need to get on board. Smaller entities may not find the convenience of Apple Pay to be worth the associated costs and risks. Banks on the cutting edge of technology may see the benefits sooner. n