Devices wirelessly communicate with point of sale systems using near field communication (NFC), with an embedded secure element (eSE) to securely store payment data and perform cryptographic functions, and Apple's Touch ID and Face ID for biometric authentication.

Apple Pay can also be used to ride some public transport networks[2] either through the use of credit/debit cards (open loop) (for example across TfL in London, SL in Stockholm, and at OMNY readers across New York City's subway and city buses in Laval, with the STL and bus network) or dedicated travel cards such as JR East's Suica, the Chicago Transit Authority's Ventra, the San Francisco Bay Area's Clipper (closed loop) and Hong Kong's Octopus Card.

In iOS 17 or later, the number of cards able to be added to the service is determined by the capacity of the secure element, which varies by device.

[3] The service keeps customer payment information private from the retailer by replacing the customer's credit or debit card Funding Primary Account Number (FPAN) with a tokenized Device Primary Account Number (DPAN), and creates a "dynamic security code [...] generated for each transaction".

In the United Kingdom, traditional contactless payments using bank cards are limited to £100 (previously £45 until 14 October 2021)[8] as no cardholder authentication is provided as part of the transaction.

Payments using Apple Pay, however, support payments of any amount owing to the increased security and lower risk of fraud in Apple Pay transactions (although some issuing banks may impose their own transaction limits, and not all contactless readers support this functionality – see CDCVM below).

[14] Apple is ending its in-house "buy now, pay later" service in the US, shifting to third-party lenders for instalment plans.

The use of CDCVM allows for the device itself to provide verification for the transaction and may not require the cardholder to sign a receipt or enter their PIN.

[21][22][23][24][25] The service was in preparation for "a long time", as Apple acquired startups, hired executives and filed patents related to payments.

[10] A Visa executive said that 750 people at the company worked on the anonymized "token" system for a year, and the other partners had similar teams in collaboration.

[26] The announcement of the service came at a time when Mastercard and Visa policy created strong incentives for upgrading to mobile payment-compatible point of sale systems.

[4] The iOS 8.1 software update accompanying the service's launch activated Apple Pay on compatible devices.

[31] Bank of America is outfitting some of its ATMs with Apple Pay support and the ability to withdraw cash using it.

Apple Pay also supports payment via all QUICPay and iD enabled terminals that are already popular in Japan.

[41] In 2023, the Consumer Financial Protection Bureau (CFPB) began rulemaking on a proposal that would make Apple Pay and other digital payments services subject to bank-like oversight.

[46] Journalists in the United States noted that the multiple previously unsuccessful efforts of other retailers to build mobile payments services,[4][26] including those of PayPal, Walmart, Target,[4] Google Wallet, and Softcard.

[26] They noted that previous efforts did not solve customer inconvenience issues, and felt that Apple Pay potentially did.

[26] Nathaniel Popper of The New York Times referred to the banks' level of coordination with Apple as "elaborate" and indicative of mutual "preparation and investment".

[85][86] The Verge's Nilay Patel wrote that the product demo was "remarkably smooth" and "a cohesive user experience".

Among the plastic card's benefits, he included how others could make purchases on another's behalf and how dead cell phones could leave the owner stranded.

[86] In a 2018 publication released by Consumer Reports, Apple Pay Cash was the leading peer-to-peer payment service.

[90][91][92][93] In the United States, Apple faced opposition by the mobile payments industry, particularly the Merchant Customer Exchange (MCX) which was starting a competing system known as CurrentC.

Several participants of CurrentC, such as Best Buy, Walmart, and Publix had initially stated that they would not accept Apple Pay as a result of exclusivity deals.

[100] Target's CEO Brian Cornell said that they would be open to accepting Apple Pay eventually after the conversion to chip and PIN technology is done, but they remain involved with MCX.

LCBO had been gradually rolling out Apple Pay support since June at its stores, which had NFC-based terminals for contactless payments.

[115] On May 31, 2019 New York City Transit announced support for Apple Pay at its OMNY terminals on busses and subways.

[116] On August 21, 2019, and December 23, 2019, Miami Dade Transit announced support for Apple Pay at all fare gates and on buses.