Apple Pay Explained: What It Does & How It Works


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Still use cash? Still use a physical credit or debit card? Right now you’re still in the majority, but that’s changing fast. In 2018, 55 million people in the U.S. used a mobile payment method–that’s 20% of the population. And that number is expected to increase from here on out until a majority of people pay for items with their mobile phone by the middle of the next decade.

That’s why everyone from Google to Samsung to Apple has gotten in on the mobile payments game. Apple was one of the leaders in the field, introducing Apple Pay back in 2014. As the service turns 5 this year, we take a look at everything you need to know to get started with Apple’s mobile payment solution.

What Is Apple Pay?

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Apple Pay is Apple’s contactless payment technology. With it, users can simply place their iPhone up to a contactless card terminal and press their finger to their iPhone’s Touch ID to authenticate for their purchase. With newer iPhones with Face ID, users will simply scan their face to authenticate a purchase

When Tim Cook introduced Apple Pay back in 2014 he stated that most people use credit cards, but added: “[they’re now a] fairly antiquated payment process” that is almost 50 years old. Speaking about a credit card’s drawbacks Cook said, “We’re totally reliant on the exposed numbers and the security codes that all of us know aren’t secure. It’s no wonder that people have dreamed of replacing these for years. But they’ve all failed.”

But really. It’s all about the Benjamins…

With over 200 million credit card transitions a day in the US alone, Cook said the payment transaction area was ripe for Apple’s innovation. Innovation is one thing, but the advent of Apple Pay stands to net the company billions of dollars in revenue too. According to a report from Bloomberg, Apple receives a fee for every Apple Pay transaction, which means the company will get a share of the more than $40 billion bucks generated each year from credit card transactions.

And that is A LOT of cash.

What Devices Does Apple Pay Work With?

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Virtually every device Apple makes, including devices with Touch ID and Devices with Face ID.

Apple Products That Support Apple Pay

  • all iPhone models with Face ID
  • all iPhone models with Touch ID, except for the iPhone 5s
  • all iPad Pro, iPad Air, iPad, and iPad mini models with Touch ID
  • all iPad Pro, iPad Air, iPad, and iPad mini models with Face ID
  • Apple Watch (1st generation)
  • Apple Watch Series 1 and 2 and later
  • all Mac laptops with Touch ID
  • all Macs introduced in 2012 or later as long as you have a compatible Apple Pay-enabled iPhone or Apple Watch

How Does Apple Pay Work?

When you want to pay for a product at a contactless terminal, simply take your iPhone out and bring it up to the NFC reader at the till. There’s no app to launch–your iPhone will know you’re making a payment. The screen will show you the total amount and the card you are using. To confirm the payment, simply place your finger to the Touch ID or scan your face with Face ID to authenticate the transaction. Within seconds the transaction is complete. What’s crazy is you don’t even need to look at the screen to know your payment went through. The iPhone produces a subtle vibration alerting you it has.

You can also use Apple Pay on your Mac or iPad to pay for products online. Simply click the “Buy with Apple Pay” button on the website and authenticate with Touch ID on your Mac or use a compatible iPhone to authenticate the purchase.

What Payment Choices Do I Have Using Apple Pay?

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With Apple Pay, you can simply use the credit card you have on file with your iTunes account or you can use the Wallet app to take a photo of any Visa, Mastercard or American Express card you own. The Wallet app will pull out all your card details and confirm them with your bank. The card – it can be a debit or a credit card – is then added as a payment method.

Is It Secure?

Yes. Once you’ve added all your payment cards their numbers are actually no longer stored in your iPhone, iPad, or Mac. Instead, a unique Device Account Number is assigned to each payment method and encrypted and securely stored in a new coprocessor called the Secure Element. The rest of the apps on your devices have no access to this Secure Element chip, so your payment details are always safe. Further, even if someone accessed your phone, they couldn’t approve a transaction without your fingerprint.

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What’s more is when you make a payment using Apple Pay, the Device Account Number of your payment method is combined with a “transaction-specific dynamic security code”, which means the merchant never even gets access to your credit card number–or even your name. As for Apple, the company says it has absolutely no access to your payment information (with the exception of the card associated with your iTunes account) because all your payment information stays locked in the Secure Element chip and is never sent to Apple’s servers.

And if you lose your phone? Simply wipe it clean with Find My iPhone and all your payment information is deleted from that phone forever.

Where Can Apple Pay Be Used?

Apple Pay currently works in over 55 countries around the world. It works in both stores and online. In stores, you can use Apple Pay virtually anywhere that takes contactless payments. In the U.S. popular stores that accept Apple Pay are Macy’s, Starbucks, McDonald’s, Apple Stores, Nike, Disney Stores, PetCo, Whole Foods, and more. Apple Pay is also capable of making transactions in apps, which makes paying for services in third-party apps much more secure. Supported apps include Uber, Target,, Panera, OpenTable, and Groupon, among many, many others.

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