Your mileage may vary but this is what I've seen so far...
- I've had the iPhone 7+ replaced already (Genius Bar) and tried another Apple ID. I spent two hours with a genius who couldn't understand why it was doing it, either. Issue returned.
- Called my bank (BofA) for the third time, they refreshed/re-refreshed my address in their system, assured me the old address was purged from their system, as well as Apple Pay.
- Tried using Apple Pay on new/replacement iPhone 7 with same CC/Debit card # with Starbucks app to refill my rewards card. Sbux requires your billing address.
- My debit absolutely would not go through with my current/correct address as it did a few weeks ago but would only go through with old billing address; it did not have this problem several weeks ago when I was on phone with BofA, the bank rep (in the Apple Pay Dept, they said) had me test it on the phone and it worked, now it doesn't.
Now, in the meantime...
- My BofA CC card (Visa; not debit) was replaced because of another one of those lovely "security breaches" so I have a new CC # all over again.
- Updated Apple Pay with the new Visa CC#, deleting the old Visa CC# that would perpetually harken back to my old address.
- The new Visa card now only uses my new billing address, the issue disappeared entirely with the new CC #.
I'm not saying it is or isn't Apple Pay itself, or the bank but once the CC # was changed, the issue disappeared entirely for the afflicted card on my iPhone 7+. I suspect when my Debit # gets replaced, the issue will disappear for that card as well.
If I were a betting person, my money is still with the bank (pun intended) as the main contributor to this problem. When I spoke with a senior advisor several weeks ago, he was pretty confident the issue remained with the bank because Apple Pay was less a payment system, more a conduit for payment processing; addresses, in particular, are the business of the bank, not Apple, or so I was told. I'm not saying he is wholly accurate but when I spoke with the bank (BofA's Apple Pay Dept. Yes, literally.), that point was confirmed as accurate.
Your mileage may vary but I suspect this is what happens...
The Digital Card CC # that Apple Pay creates is obviously tied to the bank; the bank confirms or rejects billing addresses; Apple Pay keeps the last "known good" address; New Addresses that check-in as "good" replace the previous good address so long as the bank doesn't reject it. Apple has little-or-nothing nothing to do with the information flow between the Digital CC # and the bank but keeps track of "known good" material. When I reset/restore an iPhone, it keeps the last-known good card, and asks for the 3-digit code on the bank of the card to confirm it.
The only way to truly know is if someone who has a competitor or Apple Pay (Samsung? Android?) and sees if the same behavior as we are seeing with Apple Pay holds-up. I'm willing to bet it does, and it's the bank that is causing the problem for most of us.
In the meantime, the best workaround I've seen, while hardly ideal, is to get a replacement card from the bank. That really fixed it for me, and this was after three (3) separate calls to BofA'a "Apple Pay team."
Good luck, friends.