Ultimate Guide to Apple Pay

UPDATED! Apple Pay has arrived as part of the iOS 8.1 update on 10/20/14, so we’ve put together this primer to help you start using it.  Here we explain how the service works and why it should be exceptionally safe, plus we list all the participating banks, retail stores, and apps. Put away your wallet and jump on board!

What is Apple Pay?

Apple Pay is one of the most exciting new features of iOS 8, although you need an iPhone 6 or iPhone 6 Plus to use it. (Apple Watch will also use Apple Pay when the device releases in 2015, as long as you pair it with any iteration of iPhone 5 or 6. Also, iPad Air 2 and iPad mini 3 can use Apple Pay with participating apps, but not at retail stores.) These are the first Apple devices to incorporate NFC (near field communication) technology, which allows payments to be made simply by holding an iPhone near a compatible reader in a checkout isle. Up to eight credit or debit cards can be stored in Apple’s Passbook app.

Stores must invest in new sensors to work with Apple Pay, so don’t expect to use the service everywhere you go. Initially, 220,000 US stores will participate, including major chains such as McDonalds, Macy’s, Toys”R”Us, and Walgreens (see the full list below). Your bank also needs to participate, and so far, the major ones seem eager to join in (these are also listed below). Banks are excited about Apple Pay for two reasons: first, the service keeps them at the heart of financial transactions at a time when upstart companies are pushing services that circumvent them. Second, banks believe Apple Pay is so secure that credit card fraud will cost them a lot less.

Security will also be an important issue for Apple Pay users. It’s important to understand that the service doesn’t further expose your credit card information, or put it at more risk — it’s just the opposite, as we’ll explain in the next section.

How Does Apple Pay Work?

Apple Pay can use the credit card linked to your iTunes account (just confirm the card’s security code during setup), or you can use a new card by adding it to Passbook by scanning it with the iPhone’s camera or typing the information in manually. Once Apple confirms the account with your bank (you may have to call your bank or verify through an app), it is assigned a Device Account Number. That new number is the only thing shared with retailers — your credit card info stays put on your iPhone, on a dedicated chip called the Secure Element, and isn’t even stored with Apple. (They don’t keep track of what you buy, either.)

Why take the time to type in credit card info when your iPhone can automagically scan it in?

Just think about that: with Apple Pay, you don’t have to share your credit card info with cashiers, or save it on the servers of an online store that could be hacked. If you lose your phone, you can lock it or wipe it using Find My iPhone. (Nobody could use it to buy things without your fingerprint, anyway.) If Apple Pay works as advertised, it’s about as secure as you can get.

To buy something, just hold your phone near a specialized sensor in the checkout-aisle and place your thumb on the Home button for Touch ID verification. A vibration confirms the payment went through; you don’t even need to look at the phone’s screen. You can also use Apple Pay to buy things through compatible apps from online retailers such as Target, Starbucks, and Disney Store (see the full list below). All you do is select “Apple Pay” during checkout and put your finger on Touch ID.

With compantible apps, Apple Pay makes online purchasing faster and more secure.

Participating Banks

• American Express
• Bank of America
• Barclaycard (coming soon)
• Capital One
• Chase
• Citi
• Navy Federal Credit Union (coming soon)
• PNC (coming soon)
• USAA (coming soon)
• US Bank (coming soon)
• Wells Fargo

Participating Retail Locations

• Aéropostale
• American Eagle Outfitters
• Anthropologie (coming soon)
• Apple Store
• Babies”R”Us
• BJ's
• Bloomingdale’s
• Champs Sports
• Chevron
• Disney Store (coming soon)
• Duanereade
• ExtraMile
• Foot Locker
• Footaction
• Free People (coming soon)
• House of Hoops by Foot Locker
• Kids Foot Locker
• Lady Foot Locker
• Macy’s
• McDonalds
• Nike Store
• Office Depot
• Panera Bread
• Petco
• PetSmart (coming soon)
• Radio Shack
• RUN by Foot Locker
• SIX:02
• Sports Authority
• Sephora (coming soon)
• Staples (coming soon)
• Subway
• Texaco
• Toys”R”Us
• Unleashed by Petco
• Urban Outfitters (coming soon)
• Walgreens
• Wegmans
• Walt Disney World (coming soon)
• Whole Foods Market

Participating Apps

• airbnb
• Apple Store
• Chairish
• Disney Store
• Eventbrite (coming soon)
• Fancy
• Groupon
• HotelTonight
• Houzz
• Instacart
• JackThreads (coming soon)
• Levi's Stadium (coming soon)
• lyft
• MLB.com
• OpenTable
• Panera Bread
• Spring
• Staples
• Sephora (coming soon)
• Starbucks (coming soon)
• StubHub! (coming soon)
• Target
• Tickets.com
• Uber

There are some restrictions to Apple Pay, however. It doesn't currently work with corporate credit cards, prepaid debit cards, and store-branded cards — even those from launch partners like Macy's and Bloomingdale's. (A Macy's spokesman says support is coming "eventually.") And, of course, you'll have to do a reality check — your retailer will need to have an NFC-enabled point-of-sale terminal for Apple Pay to actually work.

Apple Pay is just getting started. We’ll update this article to include any new information as it becomes available, such as additional participating retail outlets, banks, and apps. If the service works as well as Apple claims it will, there should be lots of exciting news in the coming months.