Apple Pay To Hit 1.5 Million U.S. Acceptance Locations by Year’s End, Apple’s CEO Says

Apple Inc.’s Apple Pay mobile-payments service will soon more than double the 700,000 acceptance locations it had this spring, according to figures the Cupertino, Calif.-based computer and smart-phone maker released Tuesday.

“We’re on track for Apple Pay acceptance at over 1.5 million U.S. locations by the end of 2015,” Apple chief executive Tim Cook told analysts at the company’s quarterly conference call.

Apple Pay is adding 80,000 small and medium-sized merchant acceptors every month, Cook said, noting that he expects a further lift when merchant processor Square Inc.’s new card reader hits the market this fall. The reader from San Francisco-based Square, which specializes in providing businesses with payment services via mobile devices, will process near-field communication (NFC) contactless payments, the type that Apple Pay supports at the point of sale.

Cook also said that 700 U.S. colleges and universities will accept Apple Pay in the coming school year. “In the U.S. we’ve seen fantastic support from merchants of all sizes,” he said. American Express Co. also is adding support for Apple Pay to its corporate card portfolio.

Apple Pay’s U.S. acceptance base undoubtedly is getting a big boost from the U.S. conversion to EMV chip card payments, because most EMV terminals also can process NFC transactions.

Apple Pay recently debuted in the United Kingdom and is accepted at 250,000 locations there. The service is supported by most, but not all, of the country’s major card-issuing banks.

Cook did not reveal other metrics about Apple Pay, such as transaction volume. The service, which also uses fingerprint authentication, works at the point of sale with the company’s latest-model iPhone 6 and 6 Plus smart phones, and also with the new Apple Watch wearable device when paired with certain iPhone models. Cook would not reveal Watch sales, saying he doesn’t want to tip off competitors, but he said they’ve exceeded Apple’s expectations.

The iPhone once again set a quarterly sales record, with 47.5 million units sold in the third quarter of fiscal 2015 ended June 27, up 35% from 35.2 million units a year earlier. The smart phones generated $31.4 billion in revenues, up 59% from $19.8 billion in fiscal 2014’s third quarter and accounted for 63% of the company’s total revenues of $49.6 billion.

Unit sales of the iPhone, however, fell 22% from 61.2 million units in fiscal 2015’s second quarter. Asked by an analyst if Apple was becoming too dependent on the iPhone, Cook replied that the product still had years of strong sales ahead of it. Apple’s sales are growing especially fast in China, where year-over-year quarterly revenues more than doubled to $13.2 billion.