Apple Pay: What you need to know

Everything you need to know now about Apple Pay -- how it works, where to use it, and some ideas of where it goes next.

apple pay what you need to know

Tim Cook's Apple began its latest chapter with iPhone 6, Apple Watch and Apple Pay. While we wait for Apple's iPad launch event in a few weeks, here's what you need to know about Apple Pay.

How it works:

You will be able to pay for stuff in any physical or online retail store using a contactless touch. When you make a purchase the retailer does not see your name or card number and Apple collects no purchase history.

Token effort

Apple Pay uses NFC, the Secure Element and Touch ID. You enter your card details into the system which confirms your card with your bank, and creates a unique Device Account Number (aka a token), held in the Secure Element on your device. Transactions are authorized using the token and a one-time dynamic security code.

Supported by

Apple Pay is supported by iPhone 6 and iPhone 6 Plus. It also works with iPhone 5, 5C and 5S devices in conjunction with an Apple Watch.

Use your camera

While it’s unclear how secure this process might be you can pre-load your credit card into your iPhone using your camera. Once approved the card appears in Passbook.

Wrist action

Apple Pay works with Apple Watch once you enter your passcode, if you remove your watch payments are suspended until you put it on again and re-enter the code.

If you lose your device

Find My iPhone will suspend payments from your device if placed in Lost Mode. You will not need to replace your card, just create a new token.

Secure design

Because transactions are validated using dynamic codes it impairs hackers from scanning and stealing account details during a wireless transaction. "Consumers can be confident their Apple Pay transactions will be private, safe, and secure," says Morgan Reed of the App Association.


The essential credit card data is not held in the cloud, making it extremely secure. Google Wallet failed because it held this data in the insecure cloud.

Where can I use Apple Pay?

Initially available in the US, where Amex, MasterCard and Visa and most of the biggest banks support it at over 200,000 shops. Mastercard says such payment services will be widely available in 12-18 months.

How much does it cost?

Apple is taking a small payment-processing fee from the banks. The amounts aren't huge, but Apple may immediately gain $27 million added income on existing iTunes purchases with the arrangement. It costs you nothing.

Is that it?

Apple has Apple Pay API's with which developers can add Apple Pay support to their apps. Instacart, for example, will support Apple Pay in October.


Apple Pay will be particularly exciting when using price comparison sites -- look at an item in the store and order it cheaper at another.

What about iBeacon?

Apple didn’t mention iBeacon, but it will have a part to play: Apple is currently seeking employees to help build a supporting merchant loyalty scheme (Apple Rewards?). iBeacon is used to help payment apps wake up.

So PayPal and Square are dead?

Not at all, both PayPal and Square have said they will support Apple Pay within their services.


Apple Pay is expected to launch in the US in October and internationally in future.

Visa Token

Apple's solution seems to make use of the Visa Token Service to be introduced internationally in 2015.

Apple exclusive?

If Apple is using Visa Tokens you can expect similar systems to appear on devices from other manufacturers, but they will need to invent their own ways to secure transactions as they don't have a robust solution like TouchID.

Also Read

Google+? If you use social media and happen to be a Google+ user, why not join AppleHolic's Kool Aid Corner community and join the conversation as we pursue the spirit of the New Model Apple?

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Copyright © 2014 IDG Communications, Inc.

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