An article relating to this blog post on Finextra:
Surprise! Apple makes payments play
After weeks of rumour, hype and speculation, Apple has made its long-awaited entry into the payments business with a compelling mix of NFC technology, tokenisation, biometrics and must-have mobile for...
When plastic cards become digital tokens, a strange thing happens. They become virtual. So how do you say that the Card is Present or Not Present, the legendary regulatory difference that the cards industry has relied on to differentiate between interchange
fees for Card Present and Card Not Present transactions?
Apple secured Card Present preferential rates for transactions acquired by iTunes on the basis that the card's legitimacy is verified with the issuer at the time of registration and the token minimizes probability of fraud. If an API call to the issuing
bank is sufficient to say that the Card is Present, who is to say that the same logic can't apply to online merchants who also verify the authenticity of Cards on File when they tokenize them? Then how can one arbitrarily say that the transaction processed
with token from an online mercant is Card Not Present but the one processed with Apple Pay is Card Present even though both might have made the same API call to the bank to verify the card's validity?
I know, you are going to say that in the Apple case, a physical picture of the card is taken and used to verify that the person registering the card has it. Come on, it is not that hard for an online merchant to verify that the Card on File converted as
a token does belong to the person performing an online transaction.
In the long run, as cards become digital and virtual through tokens, we are all going to wonder if card is present or not present. May be some will say "Card is a ghost" or some others, "Card is God!"