What is Apple Pay and How Does it Work?

Apple Pay is just one of many contactless payment options available in the world today, primarily used by Apple devices like iPhones and iPad tablets.

The solution was originally designed as a tool to help consumers move away from traditional wallets, and cash, into a future of “mobile wallets”. You can store your credit card and debit card information on your iPhone or Apple watch, and use your device to make payments. 

Apple Pay presents a convenient digital wallet that can be used for contactless payments in-store, in-app, or online purchases. You can even send money to family and friends via a simple message!

Here's everything you need to know about Apple Pay, how it works, and how users can set up their own Apple Pay wallet to start making purchases.

What is Apple Pay?

Apple Pay became available in 2014 and was designed to work with iPhones going forward from that year. Nowadays, it also works alongside Apple Watches. Generally speaking, the service is available for iOS devices running on iOS 10 or later, which applies to iPhones starting from the iPhone 6.

You can also use Apple Pay with iPads; however, this isn't always convenient for in-store purchases. However, it's only compatible with iPads with Touch IDs like the iPad mini 3, iPad mini 4, iPad Air 2, and iPad Pro.

According to Statista, Apple Pay enjoyed over 507 million users in 2020. Experts also predict the service to account for 10% of global card transactions by 2025. And so, for merchants not already offering Apple Pay as a payment method, this might be worth considering.

As you probably already know, Apple Pay is Apple’s mobile payment service. It’s an effortless way of making secure, contactless payments using just your phone. The transaction is supported via an NFC connection.

The benefits of Apple Pay are plain. It primarily provides more flexibility to consumers who prefer not carrying a wallet or physical cards like a visa or MasterCard. You don’t have to remember credit card numbers; you just need your phone handy whenever you want to make a payment.

Apple Pay enables you to make one-tap purchases within apps with Apple Pay set up as a payment method. Since 2017, Apple Pay also supports person-to-person transfers through the iOS messaging app. You can also use Apple Cash to ping money over to family or friends in the US.

If you’re already an Apple Pay user, you can go one step further and get the Apple Card. This comes with unique benefits that offer deep integration with the wallet app and Apple Pay.

Thanks to Touch IDs and even Face ID, Apple Pay might even be a safer way to pay. For instance, if you lose your phone, strangers can't access your digital wallet. Unfortunately, the same can't be said of contactless cards.

Apple Pay Pros and Cons

Avid iPhone users may find it very helpful to use Apple Pay for quick and simple transactions. It’s an excellent solution for anyone that doesn’t always carry their wallet around and wants to cut down on how many physical cards they have to keep on their person.

Apple Pay is widely accepted across the US and the rest of the world and doesn’t need downloading or installing from the get-go. It can also be used with Apple Watches for even more convenience.

In theory, there aren't any noticeable downsides to Apple Pay. That said, we've rounded up the main pros and cons to help you decide whether Apple Pay's the right mobile payment solution for you:

Apple Pay For Consumers: The Key Features

Setting up Apple Pay is easy. As a consumer, you just need to add your debit or credit cards to your Apple Wallet. You can also store digital credit cards, debit cards, ID cards, boarding passes, tickets (and more!) here too.

Rest assured, you can add credit and debit cards from nearly any US bank to your participating cards and activate their rewards and benefits. This includes Bank of America, Chase, Citi, American Express, Discover, Capital One, Barclaycard, etc.

Other key Apple Pay features for consumers include:

• Quick, secure, and contactless payments in-store
• It's accepted across 33 countries, including Japan, Australia, the US, etc.
• One-tap in-app and app store purchases
• You can pay for Apple Music, Apple News+, and Apple Arcade subscriptions.
• You can upgrade your iCloud storage and other Apple Services with Apple Pay payments.
• You can transfer money to friends and family via messenger. This works both with debit and Apple cash cards inside the Wallet app. This is as easy as tapping the Apple Pay button in the messenger app and entering the amount you want to send. Apple Pay then confirms your payment with your Face ID, Touch ID, or your security code! You’re also able to send requests for payments this way, making it easy for your friends to pay you back.
• You can transfer your apple cash balance to your bank account.
• Apple Pay is accepted on public transport in cities including Chicago, New York, Portland, Tokyo, Shanghai, Beijing, and London.
• You can use Apple Pay in any store with an NFC-friendly POS.
• There are multiple layers of security in place to prevent fraud.

Apple Pay is free to use. It doesn’t charge any fees in stores or restaurants. Just remember that merchants may choose to charge additional costs as a “card transaction fee.”

However, you will be charged a 3% fee if you transfer money to another person using a credit card in your Apple Wallet.

Apple Pay For Merchants: Its Key Features

Apple Pay is just as easy for merchants to use and the perfect solution to offering customers more flexibility and on-the-go solutions. Do you already accept credit and debit cards? Then there’s a good chance you can start using Apple Pay, too.

However, if you’re not accepting contactless payments at the moment, contact your point-of-sale provider to see if you can start accepting Apple Pay. You might need to ask them to enable this functionality for you.

Below we've listed some of the benefits merchants will enjoy when using Apple Pay:

• Apple Pay is more secure than credit, debit, and prepaid cards.
• You don’t receive sensitive card or account numbers
• Apple Pay works with most payment providers and card issuers, including Visa, Mastercard, American Express, Discover, China UnionPay, and more
• You can process returns as you would with a traditional card
• You can accept Apple Pay payments via Business Chat
• You can enable your rewards program to run alongside Apple Pay.
• There aren't any additional fees for using Apple Pay!

How to Set Up Apple Pay As a Consumer

As we've already hinted at, your eligible iOS device will have the Apple Wallet pre-installed. Just launch the app and add your credit or debit cards. These can then be used with any contactless payment terminal or for online and in-app purchases. You can register up to 12 cards to your Apple Wallet. For security measures, your device will also need a passcode or optionally Face or Touch ID.

Using Apple Pay is as easy as using any contactless card. You simply hold your phone towards the card reader and wait for your card to be accepted. In some regions, if your transaction exceeds a certain amount, you may need to enter your pin or provide a signature. For online or in-app purchases, you just need a simple tap. No login details or pins required!

Apple Pay can be used anywhere the Apple pay mark, or contactless NFC symbol is present.

How to Set Up an Apple Pay Account

There are a couple of ways to set up Apple Pay depending on whether you’re using an iPhone, iPad, or Apple watch device. In all cases, you’ll need to use the Apple Wallet application to enter your credit and debit card details. 

On your iPhone or tablet, you can open the wallet by going to Settings, and clicking on Wallet & Apple Pay. Here, you can add credit or debit card details with the “+” symbol. You’ll be able to upload information by using your device’s camera, then you can fill in any additional information. Your bank will need to verify the connection, and you may need to enter a multi-factor authentication code to complete the set-up. 

On an Apple Watch, you’ll need to open the Apple watch app on an iPhone, and scroll to the “Wallet and Apple Pay” option. Here, you can add your card, and follow the verification instructions provided by your bank and device. You may need to provide an additional verification method. 

How to Use Apple Pay for Transactions

As mentioned above, Apple Pay is relatively straightforward for consumers to use. In a standard retail store, you’ll simply need to present your Apple Pay connected device to the POS system, and follow the verification steps to complete a payment. This could include a fingerprint or facial scan. It may include pressing the side button on a device twice.

Online, consumers need to choose the “Apple Pay” method within the checkout when making a transaction. This will require them to use their mobile phone or Apple device to make the payment, so they can access their Apple Wallet directly. 

Apple iPhone apps also work with Apple Pay in most cases, which means users can select the option at the checkout when ordering anything from an application. However, they will still need to use their Touch ID or Face ID when making a payment. 

The Apple Pay service is also accessible via the Safari browser. On a MacBook Pro with a touch bar, it’s possible to use Touch ID directly from a laptop. However, without a touch ID solution, users will need to pay for services using their iOS device.

How Does Apple Pay Work For Ecommerce Businesses?

By enabling Apple Pay for merchants, you can easily accept mobile payments from customers for your goods and services. Once Apple Pay is enabled on your end, customers can simply add their cards to their Apple Wallet and use them to make contactless or single-tap payments. This works wonders for speeding up the payment process both in-person and online.

When customers are making in-store payments, they need to wake their devices up first. They may also have to enter a pin or unlock their device if the transaction exceeds regional limits.

Once the transaction is complete, you’ll see payment confirmation on your terminal just as you would with a regular card payment. In-store Apple Pay transactions are treated as card-present transactions, so credit card transaction fees will be charged as usual.

If you’re already able to accept contactless payments, Apple Pay should be equipped with your POS. But if that’s not the case, or you’re unsure of your POS's capabilities, simply contact your provider.

To enable Apple Pay online, you need to create a merchant ID and a payment processing certificate, which is used to secure transaction data. On the other hand, your merchant apple ID identifies your business as a merchant that can accept payments. It never expires and can be used across multiple websites and apps.

Once you can accept Apple Pay, you can display the Apple Pay mark to let customers know you provide this flexible payment option. Apple enables you to order Apple Pay signage kits for your brick-and-mortar store. This includes countertop cards, decals and clings, window posters, and a guide for employee training.

How to Add Apple Pay to An Online Store

Companies hoping to expand their payment processing options on their online store can add Apple Pay to their apps or websites. The popularity of the service has prompted many online store builders and vendors to offer Apple Pay integrations as standard. You can add Apple Pay to your accounts with WooCommerce, BigCommerce, Shopify, and many other vendors. 

Merchants using complex customizable systems such as Magento and legacy systems may need to use third-party plugins and payment gateways to integrate the Apple Pay service. 

In most cases, when you add Apple Pay to your online store, you’ll need to follow the instructions provided by your store building service. For instance, Shopify allows companies to simply choose Apple Pay as a payment option if they already have a credit card payment provider like Stripe, Authorize.net, Braintree, or Shopify Payments. You’ll also need an SSL certificate. 

After adding Apple Pay to your online store, you’ll be able to offer customers an accelerated checkout process. When customers pay for an order using Apple Pay, they will no longer need to manually enter their credit card details and shipping information. Apple will directly provide the information to the payment provider when the transaction is processed.

Apple Pay Security

Thanks to Apple Pay's simple two-factor authentication, it's even safer to use than some physical cards. In-store, your money is secure with NFC technology that's designed to only work across short distances. If your iPhone detects a nearby NFC field, it should automatically present your default card.

Apple doesn’t store or access your original credit, debit, or prepaid card numbers. In fact, it doesn’t retain any transactional details that could be tied back to you. Your card information is further protected by iCloud security, which offers another layer of encryption.

Online, your payments are also secure. Apple Pay accepts your encrypted transaction and re-encrypts it with a specific key before the information continues to the payment processor. This ensures that only the relevant app can access your payment information and no one else.

If you lose your phone, you can suspend Apple Pay by placing your device in Lost Mode. This means you don’t have to cancel all your cards immediately. Instead, you can just re-enable Apple Pay when you find your device. You can also erase your device remotely or call your bank provider to suspend any cards from Apple Pay.

Is Apple Pay Secure? Security Standards

As mentioned above, Apple Pay security is relatively reliable, and even considered to be more effective than some traditional payment methods. When a debit or credit card is entered into the wallet for use with Apple Pay, it’s assigned a unique number or token, which is linked to the phone instead of an actual card number. 

The iPhone has its own dedicated “Secure Element” chip which contains all of the payment information entered by the user, as well as credit card numbers and details which are not uploaded to any Apple servers. When transactions are completed, information is sent via NFC, there’s also a dynamic and unique security code for each transaction. 

The security code is a single-use cryptogram which replaces the CCV on the credit or debit card, to ensure a transaction is safe. Dynamic codes are actually built into the NFC tools the company uses, and aren’t unique to Apple. Alongside these codes, Apple also authenticates every transaction using touch ID or Face ID biometrics. 

When a transaction is conducted using an Apple device, a user needs to place their finger on the touch ID component of the device, or complete a scan of their face. On the Apple watch, authentication is done using skin contact on the wrist, and a passcode. If you remove the watch and the skin contact is broken, it will no longer be able to make payments. 

Apple’s use of Device Account Numbers also ensures the credit card or debit card numbers associated with a user is never shared with other merchants or payment authenticators. Employees and store clerks don’t see any user’s credit card, or have access to any personal information. Additionally, if a customer loses their Apple device, they can use the Find My iPhone service to immediately suspend all payments made from the device.

Apple Pay is just one of many contactless payment options available in the world today, primarily used by Apple devices like iPhones and iPad tablets. The solution was originally designed as a tool to help consumers move away from traditional wallets, and cash, into a future of “mobile wallets”. You can store your credit card and debit card information on your iPhone or Apple watch, and use your device to make payments. 

Here's everything you need to know about Apple Pay, how it works, and how users can set up their own Apple Pay wallet to start making purchases.

Apple Pay Rewards

Using Apple Pay alone doesn’t provide you with rewards. But you can still benefit from rewards cards you’ve signed up with your Apple Wallet. For example, if you use Apple Pay with the Apple Card, you benefit from 2% daily cashback. There aren't any restrictions as to how much cash back you can earn each day, and the money appears in your apple wallet – ready to use immediately. Not to mention, if you shop with Apple or their partnered merchants, you also get additional cashback.

FAQ

How do you change your default card on Apple Pay?

To change the default card used on Apple Pay, head to the “Settings” section on your Apple device and scroll to Wallet & Apple Pay. This screen will show a list of settings under the “Transaction Defaults” heading. The first setting option is the “Default Card”. You can click on this to choose which card you want to use as your default payment option. 

Is there a limit for Apple Pay?

Unlike most contactless card payments which limit users to a specific spend, there’s no limit for Apple Pay. This means users can buy essentially as much as they like, ensuring they don’t go over the limits set by their credit or debit card provider. 

Where is Apple Pay Available?

Apple Pay is currently available in more than 40 countries, including the US, Canada, UK, Australia, UAE, China, Russia, Singapore, New Zealand, Taiwan, Japan, and many other countries. Most people will be able to access Apple Pay in at least some stores, as well as online. 

Which devices work with Apple Pay?

Most modern Apple devices will be able to work with Apple Pay today. This includes all of the newest iPhones following the iPhone 6 Plus. You can also leverage Apple Pay with the iPad Pro, iPad Air 2, and iPad Mini, as well as various newer tablet models. The Apple Watch Series 1 and newer options can be used with Apple Pay too. 

Should You Use Apple Pay?

If you’re an Apple user, you already have the Apple Wallet on your device. So, we see no reason why you shouldn’t enable your favorite cards. While not every retailer offers Apple Pay, it's still a safe and convenient payment method to use when available.

Merchants definitely benefit from offering Apple Pay to the many consumers that favor this payment service. While it's a bit of a hassle to get your ID sorted out, it's easy afterward to use Apple Pay on your apps and website. In-store, you should already be able to use this service if you have an NFC-capable POS system. If not, you may need to think about upgrading.

Ultimately, Apple Pay is limited to Apple users, and likely won’t find many fans amongst anyone using other devices. There isn’t enough reason to switch to iOS for this mobile payment service, with flexible alternatives like Google Pay available on the market.

As always, the key to finding the best service for you is more research. Just make sure the mobile payment service you're considering is widely available in your area and provides the security you need.

Have you ever used Apple Pay before? Or are you considering one of its competitors like Venmo or Samsung Pay? Either way, let us know how you got on in the comments box below!