On Monday, Apple released iOS 8.1. The latest update to iOS fixes some bugs, brings back the Camera Roll, improves Messages, etc. but the main new feature is that Apple Pay is now enabled. If you have an iPhone 6 or iPhone 6 Plus, that means that you can now quickly and securely pay for items using your iPhone.
These are early days so Apple Pay is only starting to be supported at stores, but over time I have no doubt we will see widespread support by merchants. Right now, you can use it in places like Walgreens, Duane Reade, McDonalds, Subway, Chevron and Whole Foods.
Before you use the service the first time, you need to tell your iPhone which credit card to use. You can quickly get started by telling the iPhone to use the same credit card that you already have configured for purchasing items from the App Store. Adding additional credits cards is simple; either enter the information manually, or use your iPhone to take a picture of your credit card. In the Settings app you can select Passbook & Apple Pay to tell your iPhone which card is your default card.
Making payments is incredibly fast and easy. When you are at the store and get to the point in your transaction when you would normally have to hand over your credit card (or swipe it yourself), instead simply move your iPhone close to the reader while your finger is on the Touch ID sensor. And that's pretty much it; you've paid. Here is a video from Walgreens showing how the procedure works. I used Apple Pay at my local Walgreens and the experience was pretty much exactly like this, although it seemed even faster than what happened in this video:
Note that if you want to use a card other than your default card, you simply move your iPhone close to the reader but don't put your finger on the Touch ID yet. Your iPhone will then let you select which card you want to use to pay, and then you can put your finger on the Touch ID.
Paying with Apple Pay is nice because it is so easy, fast and convenient. But as an added bonus, it is also much more secure. The merchant doesn't get your credit card number when you use Apple Pay, and instead gets a separate Device Account Number that is unique to your iPhone, along with a transaction-specific dynamic security code. So even if a thief was working at the merchant and he was able to get all of the information that you used to make your purchase, that information is useless and cannot be used to make other purchases. And if a hacker is able to download all of the credit card information from a merchant — which we seem to read about in the news with increasing frequency lately — the hacker won't get anything useful from your transactions that can be used to steal your credit card.
Apple Pay is also secure because it is tied to your fingerprint. While someone could steal your credit card and potentially use it to make purchases, someone cannot steal your iPhone and use your Apple Pay because Apple Pay requires your fingerprint.
In addition to security, you can also get privacy with Apple Pay because the merchant doesn't even see your name, driver's license, zip code, etc. — although you can see from the above video that Walgreens encourages you to also use your Walgreens Reward Card when you make the purchase, which gives you some points but also gives the store your identity and a way to circumvent the inherent privacy with Apple Pay. But importantly, you get to decide whether or not to circumvent that privacy protection. If you don't want Walgreens to know that you purchased an item, just don't give them your Walgreens Reward Card and you will remain essentially as anonymous as you would have been if you had paid with cash.
You can launch the Passbook app if you want to see your credit cards that are associated with Apple Pay. Tap the info button at the bottom right to get information on that specific card and a list of recent purchases — both purchases made with Apple Pay and made using the card the traditional way. But you don't need to ever open the Passbook app if you don't want to do so. As noted above, you don't need to unlock your iPhone or launch any special app to use Apple Pay.
Although everything I've described above involves using Apple Pay at a physical store, you can also use Apple Pay when you make an online purchase using an app on your iPhone 6, iPhone 6 Plus, iPad Air 2 or iPad mini 3, once the app is updated to support Apple Pay. This brings all of the same convenience, security and in some cases privacy advantages to online purchases that you make with your iOS device.
Apple Pay doesn't yet work with every credit card, and for now only works in some stores. As the service expands over time it will become more and more useful. But whenever I am shopping somewhere that does support Apple Pay, I can't imagine a reason that I would ever pay any other way.