Apple enters the mobile payments business

Apple is getting into the mobile payments business with the launch of Apple Pay in the U.S. next month.

"We've placed a lot of energy into creating an entirely new payments solution," said CEO Tim Cook at the company's annual September product launch in Cupertino, California, Tuesday.

The service is built into both versions of the iPhone 6, which have an NFC (near-field communication) antenna, and Apple Pay will also be offered to those with earlier iPhone versions via an iOS 8 update.

Security for the service will be through the phones' Touch ID.

The service can be activated using credit card information stored in iTunes accounts. New cards can be added to the service by taking a picture of them through the iSight camera on an iPhone. When users add credit cards to Passbook, the numbers are not stored or shared on the device or Apple servers and neither is any information about a transaction.

The service applies a one-time, unique number to authorize each transaction.

"We have security integrated throughout both hardware and software in a way only Apple can," said Eddy Cue, Apple senior vice president of Internet Software and Services.

Apple Pay will be more secure than carrying around a wallet with credit cards in it, because the Find My iPhone service can be used to suspend service on lost or stolen devices, Apple said.

Mastercard, Visa and American Express are all on board for Apple Pay, as are banks accounting for 83 percent of credit-card purchase volume, the company said. Merchants including Sephora, Starbucks, Panera, Groupon, Staples and MLB.com have signed up to accept payments through Apple Pay by the end of the year, with more expected to come on board.

After the U.S. launch next month, Apple plans to offer the service in additional countries, but did not specify which ones or when.