I spent hours studying how Apple Pay works, so you don't have to.

Here's what I learned distilled into 9 sentences:

1. They don't store credit card details on iPhone or Apple servers, instead send it to the payment network

2. The payment network creates a unique number, DAN, to represent the credit card and iPhone

3. The iPhone stores DAN in the secure element, a specialized chip, for security

4. The card reader creates a transaction record when the iPhone communicates with it via NFC

5. The iPhone creates a cryptogram, single-use password, using DAN and transaction details

6. The iPhone sends only cryptogram and transaction details to the payment network

7. The payment network validates it by regenerating the cryptogram using its DAN copy

8. The payment network creates a new cryptogram using DAN, response code, cryptogram

9. The iPhone validates it by regenerating the new cryptogram and sends it to the card reader

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👋 PS - I wrote an article with visuals about this case study in my newsletter:

→ newsletter.systemdesign…