Stores Are Not Ready For Apple Pay

Friday, September 19th, 2014

There are major banks and credit card issuers who already support Apple Pay and many are on their way. What Apple’s new payment service needs now is more merchants and customers.

Apple hopes that shoppers will choose to use Apple Pay to make purchases with their iPhone. Apple Pay uses the technology known as near-field communication (NFC). It works with touch ID system where a user’s fingerprint is a pass code. Apple Pay promises to make transactions more secure but it still has trouble winning acceptance from merchants.

Merchants will need to install a reader at their point-of-sales in order to be able to accept so-called tap-and-go payments. A few merchants are currently using NFC readers and many merchants (e.g., Best Buy) who had NFC acceptance turned it off because the cost of supporting platform was too high.

Apple says that iPhone owners will be able to use Apple Pay at 220,000 U.S. stores, including McDonald’s, Macy’s and Bloomingdale’s. But will Apple be able to get other big retailers and small shops to turn on the NFC machines?

Some big merchants remain skeptical, for example Wal-Mart confirmed that consumers won’t be able to buy things at their stores using Apple Pay. Instead, Wal-Mart is backing a retailer-owned mobile technology group called Merchant Customer Exchange (MCX), which also counts Target and Best Buy among its members.

MCX’s payment service requires only a software download and can be used on existing iPhones and Android devices, whereas Apply Pay is only for the latest generation handset.

The group is going to launch a mobile wallet application called CurrentC. The application will link with customers’ checking accounts, retailer gift cards and select merchant branded debit and credit accounts. CurrentC doesn’t use NFC technology; it uses a digital QR code on smartphone app which retailer scans.

Such systems like Amazon.com, Square and PayPal are not equipped to process NFC payments as well. That means millions of small shops and corner stores won’t be accepting Apple Pay. So, the truth is only few shops use NFC. For Apple Pay to take off, it has to start with a reader device.

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