Apple Pay works with iPhone 6 and iPhone 6 Plus through a groundbreaking NFC antenna design, a dedicated chip called the Secure Element, and the security and convenience of Touch ID. Apple Pay is easy to set up, so hundreds of millions of users can simply add their credit or debit card on file from their iTunes Store account. Apple Pay will also work with the newly announced Apple Watch, extending Apple Pay to over 200 million owners of iPhone 5, iPhone 5c and iPhone 5s worldwide.
TechCrunch notes that, "Essentially, with the new iPhones, a user holds their phone near a payment terminal, and the payment card they’ve set as a default is called up, prompting a Touch ID action where the user authenticates their transaction."
More details on Apple Pay here.
Take a look at the demo below...