Apple Pay heads across the Pond
Some observers had expected Apple Pay to launch in Canada as well, but company executives didn't discuss plans for Canada during the keynote address at Apple's World Wide Developers Conference (WWDC).
Apple Pay first launched in the U.S. last October with more than 225,000 retailers and has steadily expanded. The mobile payment service will reach 1 million locations in the U.S. by July, said Jennifer Bailey, Apple's vice president of Internet services.
She said 2,500 banks now support Apple Pay in the U.S. adding that Discover cards will be supported sometime in the fall.
While 1 million locations is considered impressive, the expansion to 90% of all 12 million retail locations in the U.S. could take five to 10 years, according to banking and credit card experts. Banks are already pushing retailers to upgrade their in-store payment terminals to support smart credit cards by October, and nearly all those new terminals also support NFC payments, like Apple Pay uses. But the rollout will still take years.
As expected, Bailey announced that Apple Pay will automatically process loyalty and rewards cards. In other words, customers automatically get coupons, rewards, loyalty points and special offers from a specific retailer -- or from Apple itself -- applied when a purchase is made from an NFC-ready iPhone or Apple Watch.
But Apple Pay will also support some store credit cards beyond just major credit cards Visa and MasterCard. Bailey named JC Penney, Kohl's, Fandango and BJ's store credit cards as those that will be supported initially.
"Apple Pay automatically presents the right card" during the payment process, she noted. The improvements she described will work with the coming update called iOS9 for iPad and iPhone, as well as Apple Watch. The update is expected in the fall.
Bailey also said that Apple Pay will allow users to buy items from hundreds of stores within the Pinterest app. She also said the Passbook app will be renamed Wallet, and will be the single place to store credit and debit cards, rewards cards, boarding passes, tickets and more.
Of interest to small businesses, Bailey said Square plans to launch a new payment reader device to accept Apple Pay. The WWDC presentation showed the coming reader device as a flat square that doesn't plug into the phone as the current Square device does. Square will apparently incorporate NFC in the coming device to support the tokenization Apple Pay provides for better security.
Patrick Moorhead, an analyst at Moor Insights & Strategy, called the new Square reader a "big deal" for small businesses.
Overall, he said Apple's expansion of Apple Pay shows the company is "well on track" to hit the goal of providing Apple Pay at half the 100 largest retailers in the U.S. by the end of the year.
Google recently announced that Android Pay will support rewards cards once it launches in the fall.
In a related announcement, Apple said it was updating its maps capability with iOS 9. One new maps feature will include the ability to see if a retail location supports Apple Pay with a small icon that appears in the retailer's thumbnail description inside the maps app.
Privacy and security have already been features of Apple Pay and in other Apple apps, but were mentioned again at WWDC with regard to the coming iOS 9. The upgrade will provide "intelligence without compromising privacy," said Craig Federighi, senior vice president of software engineering.
He declared that data on an Apple app "stays on your device under your control...We honestly just don't want to know [it]."
The comment could be considered an obvious swipe at Google, which is expected to mine user data for advertising and related purposes.
In Apple's case, user data is not shared with third parties or linked to Apple services from searches or other functions, Federighi added. "Why would you do that" he asked.