Can Apple Pay Overcome Retailers’ Resistance to Change?
Apple Pay, the Cupertino-based company’s new mobile payments system, will be rolled out later this month. As explained by Apple, the system will allow the iPhone 6, the iPhone 6 Plus, and the upcoming Apple Watch to be used as a contactless payment method through a combination of Near Field Communications (NFC) technology and a “transaction-specific dynamic security code.” The system has been hailed by consumers for its convenience and advanced security features, while investors have predicted that Apple Pay will draw more users into the company’s ecosystem and provide another lucrative revenue stream for Apple.
Although Apple Pay is a mobile payments system, Apple isn’t trying to usurp established financial institutions. Since Apple Pay works by storing credit and debit card information in a special Secure Element chip, banks and credit card companies were more than happy to lend their support to the system. According to Apple, the mobile payments system will be compatible with cards from Visa, MasterCard, American Express, Bank of America, Capital One, Wells Fargo, and others. However, while Apple Pay already has the support of most major banks and financial institutions, the acceptance of Apple’s new mobile payments system among merchants has been less universal.
Although Apple claimed that “over 220,000 locations” are ready to accept Apple Pay either as a contactless payment method or through an app, there are some notable absences from the list of participating retailers that could hamper the widespread adoption of this mobile payments service. Here’s a rundown of some of the biggest merchants in various businesses that have yet to sign up for Apple Pay, according to The Daily Dot.
Clothing retailer H&M, luxury fashion company Coach, consumer electronics retailer Best Buy, and domestic merchandise retailer Bed Bath & Beyond have all declined to provide support for Apple Pay, according to The Daily Dot. While department store Macy’s is listed as an Apple Pay partner on the iPhone maker’s website, Belk, Sears, and Kmart currently have no Apple Pay plans. According to Apple, McDonald’s and Subway — two of the world’s largest fast food chains — are both ready to accept Apple Pay. On the other hand, according to restaurant spokespersons contacted by The Daily Dot, Pizza Hut, KFC, and Chipotle all have no foreseeable plans to implement support for Apple Pay.
Apple Pay faces a similar limited adoption issue in the grocery store business. While Whole Foods Market is on board with Apple Pay, a Publix spokesperson told The Daily Dot that, “While we are always looking for ways to enhance our customers shopping experience, at this time, we gave no plans to incorporate Apple Pay.” Similarly, a spokesperson for BP noted that the retail payments technology used at its gas stations probably wouldn’t be fully ready to support Apple Pay until 2016.
However, there are two bright spots for Apple Pay fans to consider in this survey of merchants. First, it appears that most of the merchants contacted by The Daily Dot were taking a wait-and-see approach to Apple Pay, rather than a firm stance against it. In other words, if Apple Pay proves popular among the current group of participating merchants, it is likely that more merchants will come on board.
Second, it should be noted that merchants will soon have to upgrade their point of sale (POS) terminals with technology that can handle EMV chip-equipped cards. EMV chips provide stronger transaction security and EMV technology has already been widely adopted by most other countries around the world. As noted by the Smart Card Alliance industry association, any U.S. merchants that have not upgraded to EMV-compliant POS terminals by October 2015 will lose their liability protection for card-present counterfeit fraud losses. Since most merchants will already be upgrading their POS terminals for EMV cards before the deadline next year, there is a good possibility that many merchants will take that opportunity to also upgrade their systems for Apple Pay. For both of these reasons, there is a good chance that many more merchants will become Apple Pay partners over the next 12 months.
Follow Nathanael on Twitter (@ArnoldEtan_WSCS)