SOLVED

I solved the issue by doing a full Backup and Restore. After that it worked the very first time I used it. I think the issue was related to OTA updates vs fresh install of 8.1.

I am trying that solution.

My wife bought the iPhone 6 and I bought the 6+. Hers works perfectly while mine doesn't respond at all or has the "Hold Near Reader to Pay" error. Thus it is not a credit card problem for us.

I called Apple support and while chatting was told to "Reset All Settings" on the phone and to try it. It didn't work. Since I couldn't test it while chatting with support they instructed be to do a complete restore if the first step didn't work. Support said it is more likely to be software problem.

I did the complete restore yesterday. I have yet to test the Apple Pay and hope it works. I will do that this afternoon.

Originally, I had little hope in that solution working. Thus, I already set a Genius Bar appointment for Thursday to test the hardware. The Apple Store is one hour away.

Your post gives me hope, so I will try it today.

Also, I should note that when I activated my phone November 5 it didn't have 8.1. I had a few hiccups updating. So doing a complete restore gives me hope.