Thanks to a server-side update, iOS users in a number of countries can now use Apple Pay to pay for digital purchases from Apple, including iTunes, the App Store, iCloud storage, or an Apple Music subscription.
According to Apple's support page for Apple ID payments, the change is live in the United States, Canada, Russia, Ukraine, Australia, Singapore, Taiwan, Hong Kong, and United Arab Emirates.
If you open your Settings app, tap on your Apple ID at the very top, then tap Payment & Shipping, you'll see a list of possible payment methods. Here in the United States, that has always included most major credit cards, PayPal, or a balance added to your Apple ID through gift cards and the like. Tap Add Payment Method to add a new one: you'll see a Found in Wallet section showing cards you can add, including Apple Pay Cash here in the U.S.
Since this was a server-side update, it's unclear exactly when it rolled out in each region, and no iOS update should be necessary. It also may take a little while to show up for some users. Some of our Macworld staff have noticed that Apple Pay was used already for recent purchases, without our intervention, perhaps because our default card used for Apple ID purchases was the same as our default Apple Pay card in the Wallet.
Even if you're using the same card as before, billing the transaction through Apple Pay has some benefits. It's more secure, and allows you to use the Wallet app to more easily track transactions.