By Jim Karpen on Tue, 09/09/2014
What an event it has been, with the new iPhone 6 and 6 Plus and the spectacular Apple Watch. Also announced today was Apple Pay, Apple's new mobile payment system that will work with both the new iPhones and the new Apple Watch. The new devices have a near field communication (NFC) chip that works with mobile payment processing terminals at 200,000 merchant locations. To make a purchase you simply touch your device to the terminal, and then tap the Touch ID. That's it. Apple calls it "one-touch checkout."
All your payment information is encrypted and secure on your device. Instead of storing your credit card number on your iPhone or Apple Watch, Apple creates a device-only account number for each purchase. The merchant doesn't even see your credit card number. All of your credit card accounts can be stored in Passbook. If you lose your phone, you can use Find My iPhone to suspend all payments. Apple is partnering with Visa, MasterCard, and American Express, as well as many major retailers, including Walgreens, Bloomingdales, Staples, Subway, McDonalds, Disney, who Foods, Target, and Starbucks, as well as online services such as Groupon, OpenTable, and Uber. You can enter your credit card information into your iPhone by taking a photo of it. Again, your iPhone doesn't store the number but instead assigns an ad-hoc, device-only account. And they say they don't keep any kind of record of your purchases.
It really seems like Apple has thought this through and has made it easy to use. They see it as replacing credit cards. The new service will be available beginning next month.