Apple Pay is now live in the USA, with more than 220,000 stores already accepting payments. Anyone with a compatible iOS device running iOS 8.1 can take advantage of the new contactless payment system, with most major banks and cards accepted. Here we explain exactly how Apple Pay works, how your information is kept safe and secure and when it will launch in the UK, the rest of Europe and beyond.
What is Apple Pay?
Apple Pay is a way of paying for things with an iOS device both in brick and mortar stores such as Wallgreens and in apps such as OpenTable. In stores it uses NFC payment points and Touch ID to make and authenticate payments. In apps Touch ID is used to authenticate payments without having to enter any card details.
To make the system simple users don't need to press any buttons to make a transaction using Apple Pay. Hold a compatible device up to a contactless payment point, put a recognised digit on the Touch ID button and the payment will be made. To make payments online in apps select Apple Pay when asked to choose a payment option and place a finger on the Touch ID button.
What devices support it?
The iPhone 6 and iPhone 6 Plus both support Apple Pay both in apps and in stores as they have both NFC and Touch ID. The iPad Air 2 and iPad mini 3 support Apple Pay in apps only as they don't have NFC but do have Touch ID. The Apple Watch supports Apple Pay for in-store payments only and will need to be paired with an iPhone 5, iPhone 5c, iPhone 5s, iPhone 6 or iPhone 6 Plus.
It isn't yet clear how Apple Pay will work on the Apple Watch. Payments are made by double-clicking the button on the side and holding the Apple Watch to the NFC reader. It will pulse to confirm the payment was sent. While this uses NFC it doesn't use Touch ID to authenticate the payment and it seems likely that payments will either be limited to low-value transactions or require some other authentication or security measures.
How come my old iPhone/iPad isn't supported?
Three things are needed to make Apple Pay work: Touch ID, NFC and a special secure component inside new iOS devices. If your Apple device doesn't have these three things then you can't use Apple Pay. If your device has the secure component and Touch ID (such as the iPad Air 2 and iPad mini 3) then you can use Apple Pay for payments in apps but not for contactless payments in stores.
How does Apple Pay work?
Apple Pay is NFC with Touch ID for added security. Shops that already support contactless payments can also easily support Apple Pay, the only difference being that Touch ID is needed to authenticate payments. As only you have your fingers/thumbs this makes it a very secure way to make contactless payments.
So Apple Pay is really secure?
Credit card details aren't stored on the iPhone or on Apple's servers, which makes payment details rather hard to steal. The issuing bank hides your card number and other details behind a random code, obfuscating a very valuable piece of data with a string of apparent nonsense. This code, also known as a token, is then used authorise the payment. The code is also only ever used once with a new one created for each transaction.
Hidden inside the iPhone 6 and iPhone 6 Plus is the final, crucial piece of security. A tiny smart card, which contains data that not even iOS can access, handles all the authentication and security protocols when making a payment.
How does Apple make money?
Apple won't charge you, the merchant or developers for access to Apple Pay, but it will change banks. According to Bloomberg Apple will levy a fee against banks using the service for each and every transaction. This could become big business for Apple, especially if it is able to persuade enough people to ditch their wallets in favour of paying with their phones.
Is Apple tracking every payment I make?
Nope. Apple has made a point that this is not an attempt to collect information to sell to advertisers or build up a huge repository of customer data. Apple will not know what you buy through Apple Pay, or how much you spent. No personal details are stored by Apple.
What banks support it?
American Express, Bank of America, Capital One, Chase, Citi and Wells Fargo currently support Apple Pay. Barclaycard, Navy Federal Credit Union, PNC, USAA and US Bank will all be added before the end of the year. This Apple Support page has more informaiton on which banks and cards support Apple Pay.
Where can I use Apple Pay?
Apple claims 220,000 stores and counting. They include Apple Stores, Disney Store, Duane Reade, Foot Locker, Macys, McDonalds, Radioshack, Subway, Toys R Us and Wallgreens. Apple Pay is also available through certain apps on compatible Apple devices. Apps supported include the Apple App Store, Groupon, Hotel Tonight, OpenTable, Staples, Target and Uber. Airbnb, MLB.com, Starbucks, StubHub, Ticketmaster and a host of other apps will be added by the end of the year.
Why isn't Apple Pay available outside the USA?
Taking on the banks at their own game is complicated and ensuring that enough shops and card providers support payments takes time. Visa has let slip that Apple Pay will launch in Europe in 2015 but a specific date remains elusive. When it does come to Europe we'd imagine the UK will be among the first wave of countries.
Setting up a system like Apple Pay is complicated – and things could get confusing. Contactless payments are already up and running at places like Pret a Manger and on the London transport network, while EE has its own contactless payment app for NFC phones. Most major banks in the UK already issue contactless cards and more stores are starting to accept payments.
