The MasterCard Nearby app, available on Apple’s App Store, is billed as enabling on-the-go consumers to find more than 220,000 U.S. merchants that accept contactless payments. The app underscores the challenges contactless payments face in being perceived as enhancing convenience, crucial to winning mass-market acceptance.

“NFC-enabled merchants are far from ubiquitous,” said Jordan McKee, senior analyst, mobile marketing and commerce strategies, with Boston-based Yankee Group.

“It’s far-fetched to think that the average Apple Pay user will want to cross-reference a third-party application before going shopping,” he said.

“Payments shouldn’t have to be hard, or a guessing game. In fact, payment should be an afterthought. Until today’s highly constrained acceptance network becomes broadened, mass-market adoption of mobile payments will be unattainable.”

Welcoming the app
A MasterCard representative said consumers have shown they want an app like MasterCard Nearby.

“We’ve already seen a positive response from consumers and merchants alike to the availability of MasterCard Nearby,” said Ed McLaughlin, chief emerging payments officer with MasterCard, Purchase, NY.

“We are in the midst of a dramatic, global transformation in consumer behavior. From PCs to smartphones, tablets, TVs and game systems, wearables – and even appliances like refrigerators – are now connected,” he said.

“Connected devices have moved us into a connected digital environment, where not only everything, but everyone, will be connected.  The fundamental changes in how consumers interact and use these smart, connected devices – for research, or communication or consuming media – will also transform how they transact.”

Besides telling the user where he or she can use a contactless card or device, MasterCard Nearby also informs cardholders about where they can reload prepaid cards, get cash back with their purchases, or use an ATM.

It is not clear yet to what degree shopping and payment experiences need to evolve as connected devices provide more opportunity for engagement and commerce before, during and after a purchase.

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 drive mobile-payments use.

As NFC payments become more prominent, everyday businesses are more apt to integrate Apple Pay, raising the potential for overall adoption.

Although numerous marque merchants are slated to accept Apple Pay, the overall acceptance network is severely limited.

Even 220,000 merchant locations with NFC-enabled point-of-service terminals is a drop in the ocean when looking at overall payment card acceptance points, according to Mr. McKee.

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.

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.

Growing pains are inevitable as Apple Pay makes its way through the mass marketplace.

Apple Pay’s key selling point is that it could replace the credit or debit magnetic stripe card transaction at credit card terminals.

At bricks-and-mortar stores, Apple Pay users hold their device to the POS system. iPhone 6 and iPhone 6 Plus users put their fingerprint on the phone’s Touch ID sensor. Apple Watch users double-click a button on the watch.

Apple’s Pay is being watched to see if it can succeed in mobile payments where Wal-Mart, Target and PayPal stumbled.

Winning acceptance
Until the highly constrained acceptance network becomes broadened, mass-market adoption of mobile payments is expected to be unattainable, experts say.

“Unfortunately, this will be our reality for quite some time,” Mr. McKee said. “It’s simply unrealistic to leave your home or office with only your mobile device and expect to make all the purchases you typically would with cash or plastic.

“For now, Apple Pay is a credit card surrogate for use at a highly limited number of merchant locations,” he said.

Final Take
Michael Barris is staff reporter on Mobile Commerce Daily, New York.