Apple CEO Tim Cook Announcing Apple Pay

Apple Inc. has officially launched Apple Pay this week, a payments systems integrated with its Passbook app to centralize and simplify retail and online purchases. When Apple introduced Apple Pay alongside the new iPhones back in September, CEO Tim Cook mentioned that there are over 220,000 locations in the United States that have payment terminals with Near Field Communication which means over 200,000 locations are ready for Apple Pay. Apple has also garnered the support of over 500 banks in the U.S, and now Apple Pay is finally live for Fanboys to experience in the flesh.

But how do you use Apple Pay, how can you ensure its security, and where can you use the latest mobile payments tool?

Apple Pay 101

How it works

There are two things you need to know about Apple Pay: you can use it to pay for things in stores or restaurants with Near Field Communications (NFC) terminals, and you can use it for in-app purchases. In the future, Apple Pay functionality will be extended for use with online purchase from various merchants.

In stores, Apple Pay works simply by waving your iPhone 6 or iPhone 6 Plus over an NFC terminal. When the transaction is complete, your iPhone will beep and vibrate to confirm.

While only these two new iPhones are equipped with Apple Pay so far, the upcoming Apple Watch will come with an NFC chip. Scheduled to launch early next year, the Apple Watch will extend Apple Pay capabilities to other iPhones it pairs with, including the iPhone 5, 5c, or 5S.

To use Apple Pay for in-app purchases, just tap on the Apple Pay icon wherever you see it in a compatible iPhone app, and place your finger on the Touch ID. Apple Pay for in-app purchases is available on any iOS devices equipped with Touch ID, including the iPhone 6 and iPhone 6 Plus, the iPhone 5S, and the recently announced iPad Air 2 and iPad mini 3.

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Setup

Setting up Apple Pay is simple enough. Just add your credit or debit card from your iTunes account to Passbook by entering the card’s security code. You can also add other cards by taking a photo of the cards using your iSight camera, or manually entering the information to Passbook. The first card you enter in Passbook becomes your default payments card but you can change the default card in your Settings.

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Security

Apple claims that Apple Pay is more secure than handing over your credit or debit card, since your card information is visible. Apple Pay protects your full credit card number, assigning a unique Device Account Number to the cards you add. The Device Account Number is then stored in the Secure Element, a dedicated chip in the iPhone 6 and 6 Plus, which separates that data from all the other data in your device.

To process a payment, a new transaction-specific dynamic security code is created, which prevents your information and your card information from being known by the other party. This security code, even when intercepted by a hacker, will be useless, as the whole payment process can only go through when it is paired with the user’s Touch ID fingerprint. Apple claims that the numbers generated are not stored in their system.

Major supporters

Major credit card providers such as Visa Inc., MasterCard Inc., and American Express Co., as well as debit cards from Bank of America Corp., Capital One Financial Corp., JPMorgan Chase Bank, N.A, Citigroup Inc., and Wells Fargo & Co., all work with Apple Pay. Adding these card to Apple Passbook will also allow you to experience the same rewards, benefits, and security offered by your card provider.

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Where you can use Apple Pay

As mentioned earlier, Apple Pay is accepted in over 220,000 stores, and that number is expected to grow. Some of the brick-and-mortar stores where you can use Apple Pay now include Apple Stores, Aéropostale, Inc., Bloomingdale’s, McDonald’s Corp., Nike Inc., Toys “R” Us, Inc. and RadioShack Corp to name a few.

For in-app purchases, apps from Airbnb Inc., OpenTable, Target Corp., Panera Bread (also known as St. Louis Bread Company), Uber Inc. ad Tickets.com Inc. are just a few apps that support Apple Pay, with more to come later this year.