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Apple pushes digital wallet with Apple Pay

By WTOP Staff

MAE ANDERSON
AP Technology Writer

NEW YORK (AP) — Apple is betting that people want to pay with a tap of the phone rather than a swipe of the card.

The technology company on Tuesday introduced a new digital wallet service called Apple Pay that is integrated with its Passbook credential-storage app and its fingerprint ID security system.

The announcement came as Apple introduced several new products including a new, larger iPhone 6 and a watch. Apple Pay is designed to let iPhone 6 owners use their smartphones to pay for purchases at brick-and-mortar stores as well as online via apps. The company says it’s easier and more secure than using a credit or debit card. And it puts Apple in direct competition with services like PayPal and Google Wallet.

So-called mobile proximity payments are expected to grow exponentially over the next few years. Citi Investment Research analyst Mark May said they could grow from $1 billion in 2013 to $58.4 billion by 2017. Still, consumers will have to weigh the convenience of not pulling out a card with the possible danger of storing important financial information on their phones, particularly as retailers like Target and Home Depot report data breaches, and hackers crack celebrities’ iCloud accounts.

In stores, the system uses a technology called near-field communication, which allows mobile phones to communicate with other devices at close range. Many Android phones already have a near-field communication antenna, but iPhones have not until now. Users will pay by holding a phone close to a contactless reader with their finger on the touch ID fingerprint system. It’s also set to work with the Apple Watch when that debuts in 2015.

“Apple Pay will forever change the way we pay for things,” said Apple CEO Tim Cook.

Apple addressed security concerns Tuesday, saying Apple Pay is even safer than using a plastic card. Eddy Cue, Apple’s senior vice president of Internet software and services, said credit card information will be stored on the phone via a secure chip and payments will use a one-time security code. The Find My iPhone service can erase the data if the phone gets lost or stolen — canceling a card will not be necessary. The service will be able to store Visa, MasterCard and American Express credit card information.

“A cashier doesn’t see your name, credit card number or security code,” when you pay with Apple Pay, Cue said. He also said Apple won’t track people’s financial data.

“Apple doesn’t know what you bought, where you bought it or how much you paid,” he said. “That transaction is between you, your merchant and your bank.”

Contactless payment isn’t new: Retailers like Starbucks and McDonald’s already have their own contactless payment system in stores, and Apple Pay is similar to Google Inc.’s Google Wallet, which is available on Android smartphones and iPhones. But Apple Pay adds some security features and makes a digital wallet option more accessible for iPhone users. About 15 percent of smartphones are iPhones, according to research firm IDC.

The service will be available beginning in October. Retailers will need to invest in updating their cash registers and point-of-sale units. Apple said department stores like Macy’s and Bloomingdales, drugstores including Walgreen’s and Duane Reade, and other stores including McDonald’s, Staples, Subway and Whole Foods are participating in Apple Pay.

But some of the largest retailers are not participating. Wal-Mart said it has no plans to participate. Amazon.com did not respond to a request for comment. And Target said it is currently participating only via its app.

“We know mobile is becoming the front door to Target, and we’re focused on creating the best possible mobile experiences for our guests,” Senior Vice President Jason Goldberger said in a statement. “We’re thrilled to support Apple Pay to streamline how our guests pay in the Target app – this absolutely makes purchasing from Target’s mobile app easier than ever.”

Gartner analyst Avivah Litah said the payment system will only succeed if major retailers get behind it. Apple’s security features are a plus for merchants, but it’s not clear if that will be enough.

“It’s 50-50 if merchants will get on board,” she said. “The security aspects are attractive, but it’s not clear if the security features alone are going to be enough of a selling point.”

IDC analyst James Wester said the move is in some ways Apple playing catch up to Google Wallet, but that the system uses Apple’s fingerprint technology is a plus.

“It’s not that different than what other mobile wallets have done,” he said. “The important part is that it’s Apple. We’ve been waiting for them to get into this.”

Citi analyst May said eBay Inc.’s PayPal is the closest competitor to Apple Pay, but PayPal shouldn’t be overly concerned since near-field communication and digital wallet payments are less than 1 percent of its business. In addition, consumer adoption of Apple Pay remains uncertain.

“That said, Apple has raised the bar for the digital wallet category, not only for offline point-of-sale but potentially also for m-commerce, which is more directly competitive with PayPal today,” he said.

For its part, PayPal’s chief product officer, Hill Ferguson, emphasized PayPal’s relationships with merchants and customer service, and the fact that it can work across devices.

“Businesses and consumers don’t want to be restricted to a particular device or hardware,” he said.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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