Apple Pay Review: One-Click Purchases With Top-Notch Privacy Features

Bottom line: Apple Pay offers a seamless and secure way to pay at most U.S. merchants using your iPhone or iOS device.

At a glance

What is Apple Pay and how does it work?

Apple Pay is Apple's mobile payment system that was unveiled in 2014 with the launch of the iPhone 6. It allows you to add your debit and credit cards and use your iPhone or Apple Watch as a digital wallet wherever contactless payments are accepted. You can also use Apple Pay to make online and in-app purchases using your iPhone, iPad, Mac, or Apple Watch using Touch ID or Face ID without re-entering payment information.

To use Apple Pay, you'll need to add your debit and/or credit cards to your Apple Wallet. You can do so by manually entering the card information or scanning the card. You can also add cards using your bank or credit card company's app, though your card issuer may require additional information.

When you use Apple Pay in stores, you simply double-click the side button of your iPhone or Apple Watch. Apple Pay then uses near-field communication (NFC) technology to securely connect your device to the merchant's payment terminal. If you're paying with your iPhone, you'll need to authenticate the transaction using Face ID, Touch ID, or your passcode.

Apple doesn't store your full card numbers when you add a card to Apple Wallet to use with Apple Pay. Instead, after your bank or credit card issuer approves your card for Apple Pay, it creates an encrypted account number that's unique to your device. (It's officially known as your Device Account Number.) Apple only stores part of your actual card number and part of your Device Account Number, plus a description of each card.

When you make a payment, whether it's in-store or on a website or app, the merchant only receives the Device Account Number and a transaction-specific dynamic security code. It doesn't receive your credit or debit card number. Your bank or credit card issuer uses the dynamic security code to verify the authenticity of the transaction before approving it.

Apple Pay is best-known for facilitating in-store contactless purchases and e-commerce transactions. However, if you have Apple Cash, which is basically a prepaid virtual debit card, you can use Apple Pay to send money to friends and family members.

Top perks

Convenience

Apple Pay is built into iOS devices and is easy to set up. It allows you to turn your phone into your wallet and securely store all your credit and debit cards. You can also use it to make online and in-app purchases on your iPhone, iPad, Apple Watch, or Mac with one-click checkout.

Widely accepted by merchants

Apple Pay is available wherever contactless payments are accepted. More than 85% of U.S. retailers accept Apple Pay. It's also supported in about 80 countries and territories throughout the globe.

Cash back when combined with your Apple Card

While Apple Pay does not offer rewards on its own, if you combine Apple Pay with your Apple Card, you can earn 2% daily cash back when you use your iPhone or Apple Watch to pay. You can earn 3% daily cash back at Apple and select merchants when using your Apple Card with Apple Pay. Select merchants include big names like Nike, Panera Bread, T Mobile, Uber, Uber Eats, and Walgreens, among others.

Safer than paying with a physical card

Apple doesn't store your credit or debit card numbers. Instead, your bank or credit card issuer creates a Device Account Number that's encrypted and is never stored on Apple servers or backed up to the iCloud. Merchants don't receive your credit card numbers, either. Instead, they receive the Device Account Number and a security code that's unique to the transaction.

Apple Pay's security features make it significantly safer than paying with a credit or debit card. Merchants don't receive your card info, and the data that Apple Pay stores is encrypted so you're not vulnerable to hackers.

Protections if you lose your phone

If you lose your device or it gets stolen, you can prevent unauthorized transactions by marking your device as lost. You'll lock your device with a passcode and disable Apple Pay on it.

New BNPL option for splitting purchases

In March, Apple made its foray into the buy now, pay later (BNPL) space with Apple Pay Later. The service allows users to apply for an Apple Pay Later loan of $50 to $1,000 and split purchases into four payments over six weeks with no interest. Of course, it's essential to use BNPL responsibly and avoid making purchases you can't afford.

What could be improved

Not available on Android devices

Apple Pay works pretty seamlessly for iPhone users, as it's built into iOS devices, however, it's not available on Android devices. Unlike Google Pay, which has both iOS and Android apps, there's no Apple Pay app.

Not available for store credit cards

While most major credit cards are compatible with Apple Pay, you can't use Apple Pay with closed-loop store credit cards, i.e., those that you can only use at a specific retailer.

If you want an app that offers contactless payments for Android devices: Google Pay is a digital wallet that allows you to store cards and make mobile payments and is widely accepted by merchants in the U.S. It has both an Android and an iOS app; however, contactless payments aren't currently available for Google Pay on iPhones.

If you want an app that offers investment and banking features: Cash App allows you to buy, sell, and send and receive stocks and Bitcoin to and from other users, in addition to allowing you to make purchases and transfer funds.

Apple Pay is free for customers and for businesses, though businesses will pay normal credit card processing fees.

Apple Pay is a good choice for iOS users who prefer the convenience of paying by phone instead of carrying their cards in a physical wallet. Its top-notch privacy and security features make it ideal for anyone who's concerned about safeguarding their financial information.