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No Matter What Tim Cook Said, 2015 Was Never Going To Be The 'Year Of Apple Pay' In Retail Stores

This article is more than 8 years old.

A new Reuters survey of the top 100 retailers showed that of the 98 that sell in physical retail stores, fewer than a quarter accept Apple Pay. What's more, two-thirds said they won't be adding Apple's mobile wallet this year and only four said they would add it next yet.

But no one really should have expected anything different. Notwithstanding CEO Tim Cook's insistence that half would adopt Apple Pay this year, that was unlikely to happen for a bunch of reasons.

For one, it simply costs a lot of money for retailers to install the checkout terminals needed to accept Apple Pay. Yes, retailers face an October deadline to upgrade their terminals to accept more secure chip-and-signature cards or face being liable for card fraud, and those terminals almost universally will support contactless payments such as Apple Pay. But in fact, payment experts to a person don't believe most retailers think the fraud risk is worth spending millions on upgrades.

Also, the fact remains that not everybody owns an iPhone 6 (or both an iPhone 5 and an Apple Watch, which must be paired to use to Apple Pay). Tens of millions of people do, but that's not yet enough to force retailers to accept it when most consumers are satisfied with paying with credit and debit cards and cash.

In fact, Apple users alone probably won't be enough to persuade most retailers to pony up big bucks needed for the hardware, software and training needed to accept contactless payments in the store. In a way, Apple Pay's success is dependent on other mobile wallets, like Google's new Android Pay, to open up the market to the masses. (And Android Pay's success in turn depends on Apple Pay seeding the market.) Until retailers see that most everyone can pay with their phone, they're not going to feel obligated to make the move.

Not least, many retailers don't yet think Apple Pay offers them enough benefits yet. One reason is that Apple Pay doesn't give them the kind of customer data cards do. You as a consumer may think that's just fine, but you're paying the retailer, not Apple, so the retailer for now holds the cards.

Another reason is that their loyalty programs currently can't be integrated with Apple Pay. These programs are critical for many retailers as a customer retention method, not to mention that loyalty program members often spend more.

All that is why a number of leading retailers, such as Wal-Mart, are still planning to field their own mobile wallet, known as CurrentC. That's unlikely to succeed for any number of reasons, but the 19 in the group are contractually bound not to accept other mobile wallets until at least 2016.

Apple continues to make headway, upping the number of outlets that accept Apple Pay from 220,000 last fall to more than 700,000 today. And it's expected to add a key element to the mobile wallet soon, perhaps even during its Worldwide Developers Conference starting Monday in San Francisco: a way to incorporate store loyalty programs into the system.

Indeed, an Apple spokesperson said the company is happy with its progress in the six months since Apple Pay launched: "We’ve spoken to all of the top 100 merchants in the U.S. and about 1/2 will accept Apple Pay this year, with many more the following year. There’s tremendous momentum from not only large retailers but also Main street merchants, with payment service providers telling us they’re seeing unprecedented demand from small and medium businesses nationwide.”

That kind of progress is why the Reuters survey should not suggest that Apple Pay isn't going to be a success, if success is defined as the ability to use it in most retail stores. It almost certainly will be. Just not this year, or even next year.

Even Apple's famous reality distortion field can't actually change reality.

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