Preparing for Apple Pay

By Michael Lloyd

Update: Apple Pay launched July 14, 2015, and is available from these financial institutions: American Express, MBNA, NatWest, RBS, Santander and Ulster Bank. Several other major banks, including Lloyds, Halifax and HSBC, are coming soon. Though Barclays previously said it would not allow its customers to use Apple Pay, a July 14 Tweet confirmed the bank will eventually support the mobile payment.

Apple Pay, which has already received favourable reviews in the US, has finally arrived in the UK. The service promises to streamline overstuffed wallets by allowing you to upload credit and debit cards and pay for goods at participating retailers.

If you've resisted the urge to upgrade your iPhone 5S, you won't be able to use Apple Pay, as you need the most up-to-date hardware. Apple Pay only works with iPhone 6 and 6 Plus models, as well as the Apple Watch. While that represents a fraction of the devices in the UK, if the US example is any indication, uptake among owners of those devices will be high. apple-pay-overview

Big-name retailers such as Waitrose, Boots and Marks & Spencer are already signed up to accept iPhone and Apple Watch payments. Thousands more are expected to follow once Apple Pay is launched, meaning if you have the right device you'll have plenty of opportunity to try
it out.

But before you rush out to shop, arm yourself with knowledge of how Apple Pay works, what the device requirements are, how secure the payment system is, and how much you'll be able to spend with it.

How it works
Apple Pay will work within iOS apps and at accepting retailers. To use it in a shop, all you'll need to do is wave your iPhone or Apple Watch close to a contactless payment terminal and hold your thumb or finger on the device's Touch ID to authenticate your purchase. You won't even need to wake up your device -- your Apple product will launch Apple Pay once it passes within a few inches of a compatible contactless payment terminal.

Within iOS apps, you can check out by selecting the Apple Pay option and swiping your saved fingerprint. Apple Pay will not work to make purchases from individual retailer websites, only in iOS apps.

Minimum system requirements
While you can only make physical purchases using an iPhone 6, an iPhone 6 Plus or an Apple Watch, you can make in-app purchases via an iPhone 6, an iPhone 6 Plus, an iPad Air 2 or an iPad mini 3.

As for software, you'll need to be running iOS 8.1 or higher.

Setup
To set up Apple Pay, open your Passbook app and tap the option to add a debit or credit card. If you currently use a supported card with an iTunes account that's linked to your device, you'll be given the option to tie this to Apple Pay by providing your card's security code.

Alternately, you can use your device's camera to capture the information on a compatible card of your choice and follow the instructions to verify your payment method (this image will not be stored in your photos).

You can add multiple cards and set one as the default. If you want to use a different card than the default at a particular retailer, you can choose it when you're ready to pay.

Most banks currently allow, or are planning to allow their customers to use their cards with Apple Pay.

Security
Before you can use Apple Pay, you'll need to set a passcode and store a Touch ID fingerprint on your device. When you go to pay, you can choose to either use the Touch ID or your passcode.

Apple Pay doesn't share your card details with merchants, which should leave you less exposed to fraud, Stefanie Smith, communications specialist at security firm Avast, explained in response to emailed questions.

"Apple authorises each transaction with a one-time unique number, and instead of using the security code from the back of your card, Apple Pay creates a dynamic security code to securely validate each payment," she said. "This provides a pretty high security level. But no encryption is uncrackable."

If you lose your device, you can use the Find My iPhone service to remotely locate it and, if necessary, wipe it clean to prevent a thief from accessing your card information. Although a thief would struggle to bypass your Touch ID fingerprint, it's possible that your passcode could be broken, so it will be best not to take any chances.

Payment cap
If you're picturing yourself ditching the plastic for good and making all of your physical purchases with your iOS device, you'll need to slow down a little. On launch, Apple Pay transactions in the UK will typically be capped at £20. This is currently the transaction limit for all contactless payments in the UK, though it is due to rise to £30 in September 2015.

Merchants will be able to process higher Apple Pay transactions if they update to the latest contactless payment software, but it could take some time for all vendors offering the service to do so.

"Touch ID, Apple's biometric fingerprint authentication functionality, enables Apple Pay customers to make payments above the current £20 limit for non-authenticated contactless payments," a  MasterCard spokesperson said in response to emailed questions. "However, we know that only a small number of retailer/merchant card terminals currently have the correct software to accept higher value transactions, they are still set to accept a maximum of £20."

This wasn't an issue in the US, the spokesperson said, because contactless cards and terminals were not widely used before Apple Pay, so most terminals there are new and accept all payment values.

"We are working with acquiring banks and merchants to speed up the adoption of higher value contactless payments in advance of Apple's launch," the spokesperson said.

See related: How payments will evolve in the next decade, Could Apple Pay help mobile wallets take off in the UK?

Updated: 15 July 2015