On June 11, 2015, the U.S. Patent & Trademark Office published a patent application from Apple that relates to the provisioning and authentication of credentials on an Apple iDevice and more particularly, to the provisioning and authentication of virtual commerce credentials on an iDevice. Apple's invention covers how a financial institution system in communication with an electronic device and a merchant subsystem works to avoid fraud.

Apple Pay Related Invention 

Portable electronic devices (e.g., smartphones) may be provided with near field communication ("NFC") components for enabling contactless proximity-based communications with another entity. Often times, these communications are associated with financial transactions or other secure data transactions that require the electronic device to access and share a commerce credential, such as a credit card credential or a public transportation ticket credential. However, such contactless proximity-based communications often expose such commerce credentials to interception by rogue entities.

Apple's solution can only be truly appreciated by those in professions dealing with payments systems. Apple discusses NFC in relation to contactless proximity-based communication systems for iDevices along with how transactions are processed with merchants and the use of Apple ID and its interaction with iCloud and iTunes.

Apple's patent FIG. 1 noted below shows us a system in which one or more credentials may be provisioned on an electronic device from a financial institution subsystem #350 (e.g., in conjunction with a commercial entity subsystem #400), and in which such credentials may be used by electronic device for conducting a commercial transaction with a merchant subsystem #200 and an associated acquiring bank subsystem #300.

Apple's patent FIG. 4 noted above shows us further details with respect to particular embodiments of commercial entity subsystem #400 of the system in FIG. 1.

Various types of payment cards are suitable, including credit cards, debit cards, charge cards, stored-value cards, fleet cards, gift cards, and the like. Payment network subsystem #360 and issuing bank subsystem #370 noted in FIG. 1 may be a single entity or separate entities. For example, American Express may be both a payment network subsystem #360 and an issuing bank subsystem #370. In contrast, Visa and MasterCard may be payment network subsystems #360, and may work in cooperation with issuing bank subsystems #370, such as Chase, Wells Fargo, Bank of America, and the like.

In respect to countering fraud, Apple notes that commercial entity fraud system component #450 in FIG.4 that's part of the commercial entity subsystem #400 may be configured to run a commercial entity fraud check on a commerce credential based on data known to the commercial entity about the commerce credential and/or the user (e.g., based on data (e.g., commerce credential information) associated with a user account with the commercial entity and/or any other suitable data that may be under the control of the commercial entity and/or any other suitable data that may not be under the control of financial institution subsystem 350).

The commercial entity fraud system component #450 may be configured to determine a commercial entity fraud score for the credential based on various factors or thresholds.

To review this in-depth financial authentication system, see Apple's patent application 20150161587 here.

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