Major retailers show unwillingness to adopt Apple Pay ahead of expected launch

Posted:
in General Discussion edited November 2014
Apple Pay is primed to launch as one of the most secure and convenient digital payments solutions ever devised, but certain popular retailers may slow adoption by refusing to offer support due to a conservative stance on next-gen commerce or conflict with their own ambitions in the sector.



When Apple announced Apple Pay at its iPhone 6 event in September, the company revealed that it had struck deals with all three major credit card networks -- Visa, MasterCard and American Express -- as well as top card-issuing banks like Citi, Chase and Wells Fargo. While a huge step in payments branding never before achieved, Apple still faces significant hurdles in winning widespread adoption with merchants.

The Daily Dot compiled a list of retailers hesitant to get on board the Apple Pay bandwagon, illustrating the complex network of alliances necessary for an industry newcomer to roll out an entirely new platform. Indeed, many firms entrenched in traditional credit card systems are wary that Apple and its tokenized payment method could upend the industry.

The publication first points to Best Buy, questioning why the big-box electronics store, supposedly in tune with cutting edge technology, is not supportive of Apple's new solution. Those closely following the subject will remember that Best Buy is partnered with the likes of Walmart in a consortium of powerful retailers called the Merchant Customer Exchange, which is trying to get its own out-of-network payments systems off the ground.

Unsurprisingly, both Best Buy and Walmart said in September that they had no plans to support Apple Pay.

"While we will not be accepting Apple Pay at this time, we will continue to evaluate it as an option, as well as several other competing platforms," Best Buy spokesman Jeff Shelman told The Daily Dot.

Other big-name stores are also reticent about plans to adopt Apple's NFC-powered payments initiative, including Bed, Bath & Beyond, department stores Sears, Kmart and Belk, clothing brands H&M and Coach, BP gas stations, grocery chain Publix, and restaurants Chipotle, Pizza Hut and KFC. Worldwide coffee purveyor Starbucks will fold Apple Pay compatibility into its iOS app, but is not looking to install NFC point-of-sale terminals at its outlets anytime soon.



As noted by payments and banking expert Tom Noyes of Starpoint Blog, companies like Starbucks already have effective mobile app strategies complete with built-in customer engagement systems (Starbucks Rewards offers a free drink for every 12 food or drink purchases) and may not be interested in Apple Pay. At this point, Apple promises to streamline and secure mobile and eCommerce payments for consumers, but offers little in the way of new value for merchants.

Apple Pay is set to cause a splash in the large payments pond, but the ripples may not reach as far as some believe. At least not at first.

Apple is rumored to activate Apple Pay assets for iPhone 6 users with the upcoming iOS 8.1 maintenance update. Hidden Passbook settings menus and a privacy policy for Apple Pay credit card purchases were discovered in the most recent iOS 8.1 beta 2 build, suggesting a public launch is drawing near. Apple may choose to release the software update at a special media event scheduled for Oct. 16, at which the company is expected to unveil new iPad models.
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Comments

  • Reply 1 of 419
    sirlance99sirlance99 Posts: 1,145member
    This is going to be fun to read the comments.
  • Reply 2 of 419
    MacProMacPro Posts: 18,352member
    If they snooze they lose.
  • Reply 3 of 419
    boredumbboredumb Posts: 1,416member

    I suppose I can understand this.  The merchant's themselves, unlike the card issuers and consumers,

    don't particularly benefit from the increased security, so have little incentive to purchase compatible equipment,

    if they haven't already.

    What I think they are overlooking is the same rationale that made cards popular in the first place.  

    Ease of use and ready acceptance remove impediments to more casual and impulsive spending...

    What merchant doesn't like that?  OK, they all do, but if you already have cards to whip out anyway?

  • Reply 4 of 419

    I disagree with the concept that merchants have little to gain with ?Pay.  Merchants are responsible for fraudulent sales declined by the credit cards.  I would think a more secure system would reduce their losses.  I'm always surprised at how little effort merchants put in to checking your identity when you pay with a CC.  I had my wallet stolen once, and within about 40 minutes, the thieves got to the local mall (itself about 20minutes away) and had spent over $1000 at Sunglass Hut and Macy's.  

  • Reply 5 of 419
    I can easily take my business to companies that are doing everything they can to ensure my financial position is not compromised. I can't imagine why they would put their customers at risk when Apple Pay reduces the vulnerabilities with current approaches, but they will come around if their position loses business.
  • Reply 6 of 419

    Okay, screw ‘em. They can be left behind like the companies that didn’t enter the iTunes Music/Movie/TV/Book/App stores. They’ll give in eventually. Problem solved.

  • Reply 7 of 419
    magman1979magman1979 Posts: 1,136member
    Other big-name stores are also reticent about plans to adopt Apple's NFC-powered payments initiative, including Bed, Bath & Beyond, department stores Sears, Kmart and Belk, clothing brands H&M and Coach, BP gas stations, grocery chain Publix, and restaurants Chipotle, Pizza Hut and KFC. Worldwide coffee purveyor Starbucks will fold Apple Pay compatibility into its iOS app, but is not looking to install NFC point-of-sale terminals at its outlets anytime soon.

    Funny, because some of those chains, like Sears, BBB, along with the likes of Best Buy, are somewhat dying chains, especially Best Buy, so it would be in their best interest to support any means which can attract potential buyers to their emptying stores...

    For me, being in Canada, and not having the fortune of being able to utilize ? Pay (yet), it's not very relevant. I already avoid the likes of Best Buy and Walmart like the plague, so them supporting ? Pay won't make me shop there any more than if they shun it.

    Seeing H&M and Coach shun ? Pay is shocking to me, as a LOT of their customers use iPhone's, so it would be a match made in heaven for them. Curious what made them be holdouts for this system... In any case, it would appear the systems, policies, and politics, of the transaction infrastructure world are just as fragmented as the Android OS, hope ? can stand their ground and muscle in some sanity to this chaos.
  • Reply 8 of 419
    rob53rob53 Posts: 2,074member
    Most of the companies listed are worthless anyway. I refuse to go to Walmart. The companies that want business from people with iPhones will adopt apple pay and the others can continue to desl with people without much buying power.
  • Reply 9 of 419
    foadfoad Posts: 697member
    Quote:

    Originally Posted by boredumb View Post

     

    I suppose I can understand this.  The merchant's themselves, unlike the card issuers and consumers,

    don't particularly benefit from the increased security, so have little incentive to purchase compatible equipment,

    if they haven't already.

    What I think they are overlooking is the same rationale that made cards popular in the first place.  

    Ease of use and ready acceptance remove impediments to more casual and impulsive spending...

    What merchant doesn't like that?  OK, they all do, but if you already have cards to whip out anyway?




    Merchants benefit from increased security. The reason most merchants haven't been onboard is due to the cost of swapping out their terminals with those that support NFC. This has been the primary reason for the slow adoption even though the EU has been on chip and pin for a decade. As of next October, if their security isn't up to snuff, they will be completely liable for fraudulent charges. In the Target breach, Target was responsible. Same with Home Depot.

  • Reply 10 of 419
    softekysofteky Posts: 132member
    [RIGHT][/RIGHT]I'm sure, once the "Right Incentive" is applied, Apple will drag the retail industry into the **20th** century. Just like they did with the music and mobile phone industries.

    Right Incentive? Money and convenience driving customers to locations where the phone is an accepted payment mechanism. Credit Card companies could lower the vendor cost per transaction for zero-fraud-risk transactions. I've no doubt they'll think of something appropriate.
  • Reply 11 of 419
    Or maybe bc people don't care that much...? Is offering Apple Pay going to bring in additional revenue? Does sliding your card deter you from making purchases?
  • Reply 12 of 419
    I thought ApplePay worked with any standard NFC POS reader, am I mistaken? Is the issue that these retailers don't want to roll out NFC readers?
  • Reply 13 of 419
    sam graves wrote: »
    Or maybe bc people don't care that much...? Is offering Apple Pay going to bring in additional revenue? Does sliding your card deter you from making purchases?

    If I can avoid it.
  • Reply 14 of 419
    boredumbboredumb Posts: 1,416member
    Quote:
    Originally Posted by Carson O'Genic View Post

    I disagree with the concept that merchants have little to gain with ?Pay.  Merchants are responsible for fraudulent sales declined by the credit cards.  


    Macy's may be responsible when you use your Macy's card, but when using a major credit card, the card is, I believe, responsible, unless or until the card company demonstrates a pattern of negligence by the merchant - at least that's my recollection as a former retailer (one lifetime of several).

    Quote:
    Originally Posted by foad View Post

    Quote:

    Originally Posted by boredumb View Post

    I suppose I can understand this.  The merchant's themselves, unlike the card issuers and consumers,

    don't particularly benefit from the increased security, so have little incentive to purchase compatible equipment,

    if they haven't already.


    Merchants benefit from increased security. The reason most merchants haven't been onboard is due to the cost of swapping out their terminals with those that support NFC. This has been the primary reason for the slow adoption...


    What I said?  Or at least I intended to.

  • Reply 15 of 419
    How does anybody with a conscience shop at Walmart? Here is the perfect excuse (if you don't have one already) to avoid that store like the plague it is.
  • Reply 16 of 419
    nagrommenagromme Posts: 2,834member
    Catchy headline, omitting the key fact found in the article: some of these chains are trying to start their OWN, less-secure system (under their control and with their tracking presumably). So of course they won't (yet) support a better system that has come along. They'll certainly join in eventually, but for now it makes sense that they'd try to plant doubts to make the competitor (ApplePay) fail. Good luck with that!

    Plus, an equally true headline would be "Major retailers show WILLINGNESS..." Because plenty are on board already before it even exists.
  • Reply 17 of 419
    idreyidrey Posts: 640member
    I'm making a list checking it twice, I'm gonna find out if they take apple pay or is it good bye because where they accept apple pay is where I want to buy. (Thats the reason of why I bought an iPhone 6 you SOBs get with the program you SOBs)
  • Reply 18 of 419
    Quote:

    Originally Posted by boredumb View Post

     

    Macy's may be responsible when you use your Macy's card, but when using a major credit card, the card is, I believe, responsible, unless or until the card company demonstrates a pattern of negligence by the merchant - at least that's my recollection as a former retailer (one lifetime of several).

    What I said?  Or at least I intended to.




    Well, maybe I'm wrong then.  I though the CC company simply declined the payment and left the merchant on the hook.  Well, if your right, then it explains the complete lack of effort given by merchants to verify your ID when using a CC.

  • Reply 19 of 419
    The giant problem is that there are a relatively tiny number of NFC terminals deployed, and most of them don't have it operative. Also it doesn't mean much just yet, but there are a LOT of new terminals deployed that have slots for the new "chip" cards, but I've been trying them lately and haven't found any that work. I suspect that it mostly goes back to giant corporate IT departments not getting off the dime to do the work required to enable them.
  • Reply 20 of 419

    The article failed to mention some key points surrounding mobile payments.

     

    MCX (Merchant Customer Exchange) is setting up their own payment system and Walmart, Best Buy and many others are signed up (as of right now) to use this system. It's not as good as Apple Pay, nor as secure, but there are reasons why stores like them. Here's a few quotes from their website:

     

    "Protect and leverage valuable data to offer your customers better experiences and interactions throughout the path to purchase." Well, doesn't that sound familiar (cough Google cough). So they're going to mine your purchasing habits in order to present offers to you.

     

    "Merchant Customer Exchange is the only merchant-owned mobile commerce network..." Merchant owned. That's another key right there. As Tim Cook stated, people look at creating a service (like Apple Pay) while thinking about how it benefits them. Apple looks to create a service to benefit users. Obviously MCX is creating this for their own benefit while passing it off as benefitting users. Data mining is just the start (so they can target offers and tailor loyalty programs). I'd bet cold, hard cash that they also stand to make a juicy cut off every transaction as well.

     

     

    Another issue is that it will be mandatory for merchants in the US to update their card terminals by Oct 2015. They aren't obligated to update to NFC terminals, but they are required to support EMV. And since they're going to be getting new hardware, it's pretty much a given that the manufacturers of terminals are going to add NFC to the newer models so they can get everyone while it's mandatory to update. Big win for Apple Pay and NFC.

     

    BTW, I said mandatory, but that's not quite true. What card issuers are saying is that liability will shift on October 2015. What this means is if you upgrade to EMV then as a merchant you're protected from fraudulent use. If you don't upgrade the liability for fraudulent transactions falls back to you. No merchant will take that risk, so expect everyone to be upgrading over the next year.

     

     

    Now it looks like Kmart just had a breach as well. MCX stores all your credit card information on their servers. So unlike Apple Pay, there's a central repository of very personal data about you. With Target, Home Depot and now Kmart falling victim, who's going to trust MCX and other retailers to keep their information secure. Further, MCX has the ability to link to your bank account as well. Yikes.

     

    I think Apple Pay is going to be just fine. Let everyone else keep screwing up with their half-baked systems and watch customer confidence take a dive.

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