While Apple Pay is already being accepted by a number of big-name merchants, the list lacks the kind of everyday businesses, such as gas stations, grocery stores and public transit systems, that will drive mobile payments use. 

However, with the upcoming EMV shift next year, the situation could quickly change. As NFC is becoming a more prominent use of payment, these everyday businesses are more apt to integrate Apple Pay, lending the solution more potential for overall adoption.

“Apple has a number of marque merchants slated to accept Apple Pay, but the overall acceptance network is severely limited,” said Jordan McKee, senior analyst of mobile payments at 451 Research, Boston. “It’s important to recognize that 220,000 merchant locations with NFC-enabled POS terminals is a drop in the ocean when looking at overall payment card acceptance points.

“To encourage habitual use, a mobile payment solution needs to be accepted at locations that a user frequents on a regular basis,” he said. “Gas stations, grocery stores and public transit fit the bill nicely, but Apple Pay’s penetration into each of these verticals lags severely.”

Starting at the roots
The need to upgrade to NFC-compatible technology will slow merchants’ integration of Apple Pay.

The growing list of merchants integrating with Apple Pay is dependent on the time and effort it takes to install the necessary hardware that is compatible with NFC payments.

“I do think the list is a really good start,” said Nathalie Reinelt, analyst at the Aite Group, Phoenix. “The challenge for merchants isn’t just signing up with Apple or Apple not attracting merchants.

“Merchants first have to upgrade their POS terminals to NFC-compatible hardware in order to even have the functionality to accept NFC payments,” she said. “Many merchants are already in the process of upgrading to EMV terminals in light of the October 2015 liability shift, which will automatically come with NFC capabilities that just need to be coded and turned on, so EMV will certainly promote merchant NFC adoption.

“Until those fundamental technology issues are addressed, I would not read too much into the merchant line-up for Apple Pay.”

Timeline, so far
Apple Pay can be used in stores and online. Merchants are hopping on accordingly.

Sephora, Staples and PetSmart are a few retailers who have most recently signed on with Apple Pay and will offer the compatibility during in-store checkouts, while StubHub, Starbucks and Sephora again will integrate Apple Pay in their apps for mobile checkout.

Financial institutions Bank of America, Wells Fargo and Chase are among the several others who have backed Apple Pay from the beginning. PNC, USAA and Navy Federal Credit Union will be joining later this year.

Google Wallet, the underdog in the shadows that helped start the NFC  trend, could be quickly eclipsed by Apple Pay.

“The overwhelming majority of merchants that are geared to accept Apple Pay have already been accepting NFC transactions for some time,” Mr. McKee said. “Apple is simply tapping into the existing contactless POS infrastructure, of which it owes many thanks to Google Wallet.

“Google Wallet played an instrumental role in helping to lay an initial, albeit limited foundation for NFC transactions,” he said. “As the United States nears the EMV liability shift in October 2015, we will see more contactless POS terminals hit the market, helping to bolster Apple’s acceptance network significantly.” 

Final Take
Caitlyn Bohannon is an editorial assistant on Mobile Commerce Daily, New York