Apple Pay Expands To New Retailers, And Gets A Spot On Your Wrist

The mobile payment system is now accepted at nearly 700,000 locations, Apple said today. And by being built into the Apple Watch, the service could be a whole lot more tempting to use.

Apple Pay is coming to your wrist — if you have an iPhone 5 or better and the Apple Watch, of course. Apple CEO Tim Cook offered some new data about how widely adopted the company's mobile payment service has become and how it might grow even faster in the future. Cook said that nearly 700,000 merchant locations now accept Apple Pay, up from 220,000 when the service was first announced in September.

In addition to the retailers Apple signed up initially, it unveiled several that had signed on since then, including Foot Locker, Petco, Marriott, Anthropologie, Chevron, and Toys R Us. Cook also said Apple Pay works with 40,000 Coca-Cola vending machines and will work with 100,000 by the end of the year.

"Now Apple Pay is forever changing the way we pay for things," Cook said.

And while there is no great data on how many transactions are actually done through Apple, there is some indication that it's most widely used among younger consumers, who use it to make large purchases, largely through their credit cards. In January, Tim Cook said that $2 out of every $3 in contactless payments on the Visa, MasterCard, and American Express networks were through Apple Pay.

"Consumers that are using Apple Pay are younger, have higher incomes, and the transactions tend to be more credit-oriented," said Eileen Serra, the head of card services at JPMorgan Chase, at an investors conference last month.

"Our card members have a great affinity for Apple products and services. They are power users. And as you would expect, they are already highly engaged with Apple Pay," said Ken Chennault, the CEO of American Express, in December.

And Apple Pay could be on its way to the country's largest retailer, Wal-Mart. Last week, a Wal-Mart spokesperson told the Wall Street Journal the company was open to using Apple Pay.

Wal-Mart's Chief Financial Officer Charles Holley said at the conference that mobile payments are "definitely where the future is going to be going for our customer" and "we do know that it's got to go into mobile and whether it's going to be an Apple Pay or a CurrentC...or some things that Android devices do. It's going to be some combination of that I think."

CurrentC is a mobile payment service being developed by MCX, a consortium of retailers that includes BestBuy, CVS, and Sears. "We're going to have to wait for later for this year for MCX retailers decide whether or not to turn it on," said James Wester, a payments analyst at IDC.

The expansion in the number of locations that accepts Apple Pay, Wester said, is largely what he expected as more and more retailers upgrade their checkout hardware to be compatible with EMV, or chip-and-pin, cards by October, a deadline set by credit card networks after which they will no longer cover fraudulent purchases using old terminals. These EMV terminals are typically also compatible with near-field communication technology, which is used by Apple Pay and competitors including Google Wallet.

Once Apple Pay is available on your wrist starting April 24, it promises to be even easier to use (confession: I tried to use Apple Pay once, got flustered as I tried to find Passbook, realized that's not how it works, and then just used my credit card). Clumsiness aside, fishing out a phone to make a payment isn't dramatically different than getting a card from a wallet. Paying with a tap of the wrist, however, is a different story.

Apple chief technology officer Kevin Lynch demonstrated how Apple Pay would work with the watch as part of his tour through the watch's many apps. "Put your watch next to the scanner to do this, you don't have to bring the watch face and touch the terminal, you will get close to it, and you feel it and hear the noise on your wrist and it's done."

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