Apple releases iOS 8.1, enabling Apple Pay for some Apple device owners

Apple has finally released iOS 8.1 — the OS upgrade that will make Apple mobile devices ready to complete mobile payments at participating retailers.

After the update, which is available now, owners of the iPhone 6, iPhone 6 Plus, iPad Air 2, and iPad mini 3 will be able to pay without a card. These are the first Apple devices that come loaded with a near-field communications (NFC) chip on board.

Users can place their devices within 10 inches of the “contactless” point of sale terminal, swipe a finger across the devices’ biometric touch pad — Touch ID — and the NFC chip will exchange the payment information with the terminal.

The phone creates a unique string of ID digits for each transaction, which are stored in the “secure element” of the devices, inaccessible to the merchant or the device user.

Before announcing Apple Pay, Apple formed agreements of with Visa, MasterCard, and American Express, and signed up 80 percent of the country’s card-issuing banks. Apple says 220,000 merchants already have the NFC-enabled POS gear needed to work with Apple Pay.

Apple made a grand entrance into the mobile payments arena. Credit card companies have been pushing contactless “chip and PIN” technology at merchants for years, but relatively few have signed up (there are more than 6 million merchants in the U.S.). The sheer brand power of Apple, might bring mobile payments to the mainstream here in the U.S. in the next few years. (Chip and PIN is in widespread use in the U.K.)

Google launched its own version of contactless payments in 2011 with Google Wallet, but it made pre-existing agreements with far fewer banks than Apple did.

The iOS 8.1 update, which was announced at an Apple press event last Thursday, will also bring back the camera roll, a new Cloud photo gallery, and a long list of smaller usability features.