Apple Pay also supports credit and debit cards from American Express, Mastercard and Visa. A wide range of banks have also signed on including Bank of America, Citibank and Wells Fargo.  What are some potential challenges for Apple's new service?  Attracting more merchants could be a hurdle. To make Apple Pay work, stores have to install what's called an NFC reader at the checkout line. Currently, such devices are being used by fewer than 10 percent of merchants, according to research firm Gartner.  Industry analysts believe Apple Pay could prove an immediate hit with tech-savvy consumers, but some are cautious about the technology's broader appeal.  "It is very easy to conduct transactions with credit cards, debit cards and cash," says Bryan Yeager, an analyst at eMarketer. "You don't need a battery to be able to do that. Apple Pay will have to contend with ingrained consumer behavior when it comes to paying with credit cards."  Apple's Cue, however, disagrees with that analysis. He argues that Apple Pay will prove popular because it is much faster than traditional payment methods, and it is also more secure.  For the service to work, consumers use credit cards they already have on file with iTunes, or enter a new credit card number. A unique, 16-digit security code is then created each time a consumer authorizes a new purchase. That one-time code, if intercepted by criminals, cannot be used on another device –or by another person.  Read MoreHow hackers could still get around Apple Pay security  With the iPhone 6 and iPhone 6 plus, the transactions boast an extra layer of protection as well: the iPhone is unlocked with a user's fingerprint.  With hacking and identity theft being common nowadays, consumers might feel apprehensive about using their iPhones as digital wallets for another reason: the reams of data being generated about their habits. But Cue vows Apple will not track or collect information about what consumers purchase.  "Privacy is a key component of this," he told CNBC.  Apple's executives are clearly excited about this new service, as are the analysts who see it as a new source of revenue for the company.  The only question that remains is whether consumers will be as enthusiastic.
Apple's new mobile payment service bets consumers will no longer want to carry wallets, credit cards or cash.