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Apple's Payments Reveal: Passwords Are Passe, Prints Are In

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Many mobile commerce systems are built on the premise that we need something simpler than typing a complex password on a small screen. With the iPhone 5S, Apple unveiled its own solution: a fingerprint scanner.

Apple presented its new iPhone 5S and a less expensive 5C model during a product presentation Sept. 10 at the company's Cupertino, Calif. offices.

When unveiling the iPhone 5S' new TouchID fingerprint scanner, Apple senior vice president of world marketing Phil Schiller explained that the scan will substitute for the user's iTunes password. That means TouchID can be used to make purchases of music, books and other digital material Apple sells to iPhone owners.

The fingerprint sensor is camouflaged as part of the home button on the phone and will "map individual details in your fingerprint ridges to make sure it is allowing only you" into the phone, Schiller said. A stainless steel detection ring around the home button senses that a finger is on the button, so the user does not need to actually press the button.

The fingerprint scan will be encrypted only on the A7 chip in the phone, Schiller said. Apple will not store fingerprint scans on Apple servers, nor it store them in iCloud, he added.

Prior to the presentation, some technology bloggers predicted that, of all of the rumors circulating about the new iPhone, it was most likely that Apple would wait on adding Near Field Communication technology at least for another year. NFC is used as the foundation of mobile payments initiatives such as Isis and Google Wallet.

A yearlong delay would allow Apple to monitor how other NFC compatible devices fare.

Apple's use of fingerprint authentication is a step toward a full-service mobile wallet in the future. Industry analysts have often likened iTunes to a mobile wallet because it stores the payment credentials of countless Apple users that make purchases from the screens of mobile devices.

Apple devices also support Passbook, a wallet app that stores third-party apps such as mobile payment apps.

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