Eddy Cue: Here's how Apple Pay works on an Apple Watch

Eddy Cue, Apple's head of Internet software and service (left), and Rick Welts, president and chief operating officer of the Golden State Warriors, talk up their new partnership on Apple Pay at Oracle Arena in Oakland, Calif. Shara Tibken/CNET

OAKLAND, Calif. -- iPhone 5, 5C and 5S owners, you're in luck.

Just like those iPhone 6 and 6 Plus owners, all you'll have to do is enter a passcode or unlock your Apple Watch with your phone to use Apple Pay. explained Eddy Cue, head of iTunes, Apple Pay and Apple's other Internet software and services businesses.

When Apple announced the Apple Watch in September, it said the device would support Apple Pay and would also make the iPhone 5, 5C and 5S work with the mobile payments service. But it didn't provide many details as to how.

But on Friday, as Apple announced Apple Pay's availability here at Oracle Arena before a Golden State Warriors basketball game, Cue explained how the service will work on Apple Watch via iPhones.

Apple Pay works in iPhones by letting users simply tap their smartphone to payment terminals and then touch their devices' TouchID fingerprint sensors to purchase items. Both the smartphones and the terminals must have near-field communication (NFC) chips that store payment credentials -- something that limited the service to the new iPhone 6 and 6 Plus phones (unless you have an Apple Watch, it turns out).

Apple Watch also has an NFC chip that makes mobile payments possible, but the watch itself doesn't have TouchID. Instead, users have to either enter a password on the watch or touch their fingerprint sensor on their iPhone after they've put on the wearable, which unlocks Apple Watch. Users won't have to type a password every time they want to use Apple Pay, though. As long as they haven't taken off the device after pairing it with their phone or entering a password on the watch, it will remain unlocked, Cue said.

"You can [type a password] if you want to, but you won't normally have to," Cue said. "Right now the watch is unlocked, and I could do all of it without having to type any code. If I [took it off and] handed it to you, now you'd have to type in a security code or unlock it from your phone."

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Owners of Apple's older phones that don't have fingerprint sensors or NFC will still be able to use Apple Pay through their Apple Watch, Cue said. All they'll have to do is type in a passcode on their watch or phone while wearing Apple Watch, unlocking the device. Apple started incorporating TouchID in iPhones starting with the iPhone 5S in September 2013.

Apple Watch requires an iPhone 5, 5C, 5S, 6 or 6 Plus.

"You don't have to authenticate on the phone," said Cue, who was wearing the stainless steel Apple Watch with black strap -- the company's midrange smartwatch model. "Your watch has to be unlocked, and your phone can unlock your watch. If I took my watch off and gave it to you, it would know and no longer work. If I wanted to pay right now, I could pay with the watch and not have to take the phone out of my pocket."

The information about Apple Pay on Apple Watch comes only a few days before Apple reveals more details about its smartwatch during an event Monday at the Yerba Buena Center for the Arts in San Francisco. The company is expected to talk up apps and other features of the watch, as well as show off new Macintosh computers and possibly some software items.

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For Apple, it's key to expand beyond its current iPhone franchise. The company is more reliant on its smartphone than ever before, with about 70 percent of its December quarter sales coming from the device. It has looked to Apple Watch and Apple Pay as new products with strong potential, and it also is exploring ways to revitalize its struggling iPad business.

The Apple Watch comes in two sizes, 42mm or 38mm, and three designs: the aluminum-cased Apple Watch Sport, stainless-steel-cased Apple Watch and the 18-karat-gold-cased Apple Watch Edition. There also are a variety of bands that can be easily swapped, including a Milanese loop of metal mesh with magnets and a leather band that auto-attaches. The company will reveal more pricing and availability details Monday but has said Apple Watch will start at $349 and will hit stores next month.

Apple Pay Warriors

Cue, a longtime Golden State Warriors fan, offered the explanation about Apple Pay on the Apple Watch ahead of the basketball team's game against the Dallas Mavericks. The Warriors have started to implement Apple Pay into retail stores at the arena and will have a full rollout next season. The team also is looking at expanding Apple Pay to concession stands in the arena, as well as potentially letting fans order and pay for items while in their seats, said Rick Welts, chief operating officer and president of the Warriors.

The Warriors have had a long partnership with Apple. The team, which will open a new stadium in San Francisco in 2018, has been using its nearly 50-year-old venue in Oakland as a sort of petri dish to try out new technology. Some, like the use of Apple's iBeacon technology, have stuck. Others will be tested only in parts of the stadium before being rolled out in the new venue, while some tech may be scrapped after the trials.

Source: www.cnet.com

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