Apple Pay now accepted at 35% of US merchants, coming to Gap and more in 2017
Headlining Re/code's Code Commerce conference in San Francisco on Tuesday, Apple Pay chief Jennifer Bailey said 35 percent of U.S. retailers now accept the company's fledgling payments service, a figure expected to grow substantially in 2017.
Given Apple Pay's current trajectory, Bailey estimates the current 35 percent adoption rate, which represents some 4 million locations, will grow to two out of every three retailers in the U.S. next year, reports The Verge. The uptick will be in large part due to participation from top retailers like Gap, which plans to accept Apple Pay at registers in the coming months.
Interestingly, Bailey believes the rise of EMV chip cards is helping to push consumers toward Apple Pay. In particular, customers are unsatisfied with the "dip to pay" method, a process that is confusing and cumbersome compared to Apple's touchless solution. At the same time, Apple is unwilling to tout NFC's benefits over EMV, at least not yet.
"Knocking EMV is not necessarily the way to go," Bailey said, adding, "I think it's to increase acceptance and work with great partners."
For now, Apple appears more concerned with building out a stable foundation than going toe-to-toe with EMV. The measured strategy is wise, especially considering retailers are being forced to upgrade their point-of-sale terminals to EMV-compatible hardware. In many cases, the updated card terminals also enable Apple Pay.
Apple's strategy appears to be working, as average monthly transactions are on the rise. In typical Apple fashion, Bailey declined to offer specific numbers.
Apple Pay is also seeing decent uptake beyond its domestic market. In Japan, for example, the payments service already has 1 million activated users just six weeks after launch, Bailey said. Integration with Japanese transit services, specifically Japan JR East's Suica transit card network, played a huge role in the Japan launch, and Apple intends to extend similar features to other markets.
As for Apple Pay's next act, Bailey hinted the product might one day replace physical wallets.
"Everything in your wallet we're thinking about," she said.
Given Apple Pay's current trajectory, Bailey estimates the current 35 percent adoption rate, which represents some 4 million locations, will grow to two out of every three retailers in the U.S. next year, reports The Verge. The uptick will be in large part due to participation from top retailers like Gap, which plans to accept Apple Pay at registers in the coming months.
Interestingly, Bailey believes the rise of EMV chip cards is helping to push consumers toward Apple Pay. In particular, customers are unsatisfied with the "dip to pay" method, a process that is confusing and cumbersome compared to Apple's touchless solution. At the same time, Apple is unwilling to tout NFC's benefits over EMV, at least not yet.
"Knocking EMV is not necessarily the way to go," Bailey said, adding, "I think it's to increase acceptance and work with great partners."
For now, Apple appears more concerned with building out a stable foundation than going toe-to-toe with EMV. The measured strategy is wise, especially considering retailers are being forced to upgrade their point-of-sale terminals to EMV-compatible hardware. In many cases, the updated card terminals also enable Apple Pay.
Apple's strategy appears to be working, as average monthly transactions are on the rise. In typical Apple fashion, Bailey declined to offer specific numbers.
Apple Pay is also seeing decent uptake beyond its domestic market. In Japan, for example, the payments service already has 1 million activated users just six weeks after launch, Bailey said. Integration with Japanese transit services, specifically Japan JR East's Suica transit card network, played a huge role in the Japan launch, and Apple intends to extend similar features to other markets.
As for Apple Pay's next act, Bailey hinted the product might one day replace physical wallets.
"Everything in your wallet we're thinking about," she said.
Comments
I wish that it was available at my local grocery store for example, but it's not, at least not yet. That's probably the store that I visit most often, and things would be much easier with Apple Pay there.
There I have to use a Credit Card and I have to sign my signature, using a stylus that barely works on a black & white screen that probably is 1995 tech.
There should be an easy way for third parties to use Apple Pay, so that I could pay my weed dealer with Apple Pay, for example.
It's the tipping point when we stop saying, "Oh look, they accept Apple Pay," and instead say, "I can't believe they don't accept Apple Pay" to which look forward. I think we're another 2 years away from that, and when that happens we'll finally be able to start leaving our easily stolen cards at home on a regular basis.
So I'd sooner rather than later if this 35% number is correct.
Where do you live? I'm in Vancouver and >90% of my purchases are Apple Pay (with my Watch). Safeway, Superstore, Save-On and No Frills grocery stores here all accept tap. I use it so often that I'm surprised when I go somewhere and see "no tap" written on a piece of tape on the terminal (which literally every place that doesn't have tap has, likely because they're sick of people trying to tap).
IMO, Apple is making one HUGE mistake with Apple Pay - not advertising the security aspect of it. That's the best part. There's little saved by tapping my Watch or iPhone over an actual card. It's only slightly more convenient. Not having my real card number transmitted is a major security feature. Only thing I can think of is Apple might be prevented from mentioning this in ads as it might come across as bashing normal cards.
What is somewhat disappointing is that at least one of the places I go to is NEW and they only take swipe cards (Chipolte), perhaps it's a speed thing, but they are always packed. 7-11, McDonalds, KFC and Subway will take Apple Pay. IHOP and Little Caesars are the only places where I needed to use the Chip card only. Oh, the transit card reader is a NFC system but only takes chip cards for loading the transit card.
Home Depot
Lowes
Best Buy
Target
Costco
Walmart
and many other stores found in malls across America.
The real tipping point will be when those stores get Apple Pay. There are probably several reasons why they don't get on board, but limited ability to collect customer data is probably at the top of the list and perhaps the higher fees and more expensive terminals.
I thought Best Buy did accept now. Maybe I'm mistaken.
Target would be huge for me if they let you add their credit and debit cards and then accepted in the store.
The Apple Watch makes it very convenient (I don't have a phone with Apple Pay capability yet). However, I agree that security is the most important. Especially with debit (vs. credit, where protection from theft exists). I don't want a debit card with tap enabled. If stolen, the criminals have access to your account without any security (until you report it, or the banks anti-fraud can flag the transactions as appearing fraudulent). With Apple Pay, I can enable tap for debit with very strong security. Best of both worlds.
Poor management:
"Knocking EMV is not necessarily the way to go"??? How does this person still have her job? That's EXACTLY the way to go. The majority of the places I use a card at also has a terminal that accepts Apple Pay, but they don't enable it, even when there is such a clear advantage for the customer (poor marketing); for example, every grocery store I've been to other than Trader Joes or Whole Foods. And I hope they're not counting Square terminals in that 35%, because literally every single establishment I've been to that uses square no longer plugs in the NFC reader (because doing so obligates them to also use the chip/pin, which is time consuming and frustrating; I have to ask every time for them to plug in the NFC reader for Apple Pay, and now they've just started saying they don't accept Apple Pay).
Poor marketing:
The vast majority of people I (casually and pleasantly) promote Apple Pay to either 1) don't understand it and havn't bothered, or 2) are actually and genuinely fearful of the security risk, which, of course, there is none. In addition, I'm sure Starbucks is counted in that 35%, yet there is no indication Apple Pay is accepted, and I've never seen anyone use it in Starbucks other than myself.
Yet, it's an amazing product, and every time I use it it works smoothly and people are intrigued.
Edit: NB: I live in one of the 4 largest cities in the US.
It seems so absurd and frustrating that such a terrific product, which significantly increases the value of the Apple ecosystem, seems so poorly managed and marketed.