Am I able to replace In-App purchase with Apple Pay?
No, Apple Pay is for physical goods or services only.


  Apple Pay or In-App Purchase
  
  It is important to understand the difference between Apple Pay and In-App Purchase. Use Apple Pay to sell physical goods such as groceries, clothing, and appliances. Also use Apple Pay for services such as club memberships, hotel reservations, and tickets for events. On the other hand, use In-App Purchase to sell virtual goods such as premium content for your app, and subscriptions for digital content.


Source: https://developer.apple.com/apple-pay/Getting-Started-with-Apple-Pay.pdf (page 2)