Apple Pay Goes Live Monday, As Apple, Samsung Join ETA

The date is set. Apple Inc.’s Apple Pay mobile-payment scheme, now with more than 500 banks supporting it, launches Monday, the Cupertino, Calif.-based company announced Thursday.

Apple Pay is a payment scheme that has two components. One, available only in the iPhone 6 and 6 Plus, uses a near-field communication (NFC) chip to make contactless payments at the point of sale. The other is an in-app payment service to make mobile commerce easier. Both rely on authentication via the Touch ID biometric sensor built into the devices. Payments are made with the card on file in the user’s iTunes account, a measure that eliminates the need to tap payment credentials via a smart phone or tablet screen. There are about 800 million iTunes accounts. Apple Pay is part of iOS 8.1, available Monday.

Apple also announced Thursday that the iPad Air 2 and iPad mini 3 tablets, available next week, will ship with the Touch ID sensor for in-app payments. They will not have the NFC chip. Apple Pay also will be available in Apple Watch when it is available early next year.

Apple Pay’s supporting cast includes the Visa Inc., MasterCard Inc., and American Express Co. payment networks as well as 11 large credit card issuers representing 83% of U.S. charge volume.

Now, Apple says more than 500 banks support the mobile-payment scheme, and it announced more merchants, including Aéropostale, Champs Sports, Disney Store, Footaction, Foot Locker, Macy’s, McDonald’s, Nike, Office Depot, Panera Bread, Petco, RadioShack, Subway, Toys”R”Us, Walgreens, Wegmans, and Whole Foods Market. Other merchants expect to support Apple Pay later this year, including such as Anthropologie, Staples, and Urban Outfitters.

M-commerce apps with Apple Pay capability on Monday include the Apple Store app, Groupon, HotelTonight, Lyft, OpenTable, Panera Bread, Staples, Target, and Uber. More will support Apple Pay by the end of this year with apps such as Airbnb, Disney Store, Eventbrite, JackThreads, Levi’s® Stadium by VenueNext, Sephora, Starbucks, StubHub, Ticketmaster, and Tickets.com.

Apple also bolstered its participation in the payments industry with its membership in the Electronic Transactions Association, a move made in the past week and announced by ETA chief executive Jason Oxman at the Western States Acquirers Association conference this week in San Diego. Apple's major rival in the mobile-device market, Samsung, also joined the Washington, D.C.-based trade group, which represents the merchant-acquiring industry.

Their membership, along the likes of Google Inc. and telcos AT&T Mobility and T-Mobile USA, is emblematic of a shift in the merchant-acquiring industry, Oxman says. “We no longer are just an industry that facilitates payment acceptance,” Oxman says. “We are an industry that facilitates consumers and their merchants using the technology of their choice to engage in commerce.”

Apple’s potential influence on payments is enormous, Oxman says. “Apple didn’t invent mobile payments, but mobile payments is going to take off because of Apple,” he says.

The payments industry is prepared for Apple Pay, he adds. Mobile payments, including those made with NFC, such as Google Wallet and Softcard, have been part of the payments ecosystem for a few years, he says. The part of the payments infrastructure not as ready is the merchant community. Of the POS terminals at the 8 million merchants that accept electronic payments, there are only about 220,000 NFC-enabled readers. “Many of them have older NFC capabilities,” Oxman notes. They may be able to accept contactless payments, but may not be turned on. “Frankly, there are some issues with some of the terminals,” Oxman says.

But that is something merchant acquirers are equipped to deal with. “Our goal is to get merchants NFC-enabled,” Oxman says. “Yes, we’re ready because the ecosystem is ready. But no, we’re not ready because we need to get more merchants to have NFC capabilities.”