Both Rene Ritchie of iMore and Cult of Mac report that when a user...
first puts on the Watch they must type in a PIN code to authorize Apple Pay. Once it's on, the Watch uses constant skin contact, which it can sense using the four sapphire-covered lenses on the underside of the device, to authorize payments. However, once the device is removed from a user's wrist, they must re-enter their PIN when putting the device back on their wrist.
Thanks to sensors on the Apple Watch’s back, the device can tell when it’s being worn and when it has been taken off. When you first put the watch on, you must enter a code. When the watch is removed from your wrist, the watch locks itself and can’t be used for payments unless the code is entered again.MasterCard's mobile payment executive Ed McLaughlin also told Re/code that the Watch would use the four sensors on the back of the device as a security measure, while Visa CEO Charlie Scharf said that Apple understood the risks of contactless payments and has a solution.
The Apple Watch is due to arrive in early 2015 and will start at $350.
Source:http://www.macrumors.com/2014/09/10/apple-watch-apple-pay-security/
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