Apple Pay is expanding its merchant acceptance network to several major US retailers, quick-service restaurants, and convenience store chains, including Target, Taco Bell, and Speedway convenience stores, according to an Apple company statement. The addition of these merchants brings Apple Pay to 74 of the top 100 US merchants, or 65% of all retail locations in the country.
Target — which has long held off on accepting Apple Pay in-store — will begin supporting the mobile wallet at all 1,850 of its US stores in the coming weeks. Target is among several major US retailers — including Walmart — that avoided Apple Pay acceptance; this was likely because it was trying to push adoption of its own mobile wallet, which it launched in late 2017, though it offered Apple Pay within the Target app for online purchases.
But late last year, Target reportedly enabled Apple Pay acceptance at a San Francisco location, which customers inadvertently discovered during self-checkout when the option for the mobile wallet was available. Target is joining other major retailers that began accepting Apple Pay last year, including all 750 Costco stores in the US, 8,400 CVS Pharmacy locations, and 95% of 7-Eleven locations in the US. Additionally, Target will be adding acceptance for Mastercard contactless cards.
Building out a widespread merchant network is an integral step in increasing Apple Pay volume.
- A universal acceptance network could allow consumers to form habits around Apple Pay. Apple Pay has been pursuing international expansion to grow its volume: An estimated 85% of Apple Pay users come from outside the US, likely because many non-US markets are already attuned to contactless payments, which can precipitate demand for mobile wallets. But it's imperative for Apple Pay to focus on the US, particularly because it's likely the biggest iPhone market globally. By adding compatibility with major retail partners, customers will have the chance to use Apple Pay more regularly and potentially form habits around the mobile wallet.
- Beyond developing a universal acceptance network, there are other concerns Apple Pay will have to address in pushing adoption, like security concerns. Low merchant acceptance or lack of awareness were likely two key reasons Apple Pay has seen lagging adoption and engagement in the US since launching in 2014. And while expanding its merchant network addresses that barrier to adoption, safety remains a concern for all mobile wallets, as 43% of consumers don't think mobile wallets are secure. Others are comfortable with their preferred payment methods and might need an incentive to try a mobile wallet — 44% of respondents to a Mintel study said rewards would get them to switch payment methods, for example; and Apple Pay has begun offering discounts at local retailers for customers to pay with the mobile wallet. Continuing to offer discounts, or implementing a rewards program, could drive users to Apple Pay and complement its merchant expansion to continue its upward momentum after recently surpassing 1 billion transactions during its fiscal Q4 2018.
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