June 9, 2015
Apple Pay to support retailer credit cards and reward programs
Apple announced yesterday that, with iOS 9, it will add retailer branded credit and debit cards to its Apple Pay program as well as support for retailers’ reward programs. The tech giant also announced it will add Discover cards to Apple Pay.
To take full advantage of the new features, users will add their participating rewards and store brand credit cards to the Wallet app (formerly Passbook), enabling their use with Apple Pay at checkout.
Among the retailers that will soon be accepting Apple Pay and adding their respective rewards and/or private label card programs this year include BJ’s Wholesale Club, Dunkin’ Donuts, J.C. Penney, Kohl’s, Walgreens and Wegmans. Best Buy, Big Lots, Express, Forever 21 and Trader Joe’s are other retailers already accepting Apple Pay, though no announcements have yet been made as to adding the new options.
Photo: Apple
"Providing our shoppers with innovative ways to pay while offering flexibility supports our commitment to delivering a simple and convenient customer experience," said Kevin Mansell, Kohl’s chairman, CEO and president, in a statement. "By integrating with Apple Pay in all of our stores, Kohl’s customers can choose how they want to pay, whether using their Kohl’s Charge or Yes2You Rewards loyalty points, payments are easy and secure."
"Apple Pay is still optional and not yet essential for merchants," Sucharita Mulpuru, an analyst at Forrester Research, told Bloomberg. "Adding loyalty rewards is a first step in building a more integrated mobile wallet."
Apple also announced that Square would introduce a reader this fall that would accept Apple Pay. That will expand Apple Pay to small businesses across the country.
BrainTrust
Mark Price
Adjunct Professor of AI and Analytics, University of St. Thomas
Recent Discussions
Discussion Questions
Will the changes being made to Apple Pay lead to greater adoption by chain stores? What are the greatest challenges to Apple Pay achieving greater market share in the mobile payment space?
Poll
Yes, the integration to loyalty programs is very important for adoption I think.
I don’t see a lot of challenges to Apple Pay achieving greater market share beyond time—the refresh cycle for existing iPhone users holds it back, and the fact that Android users are not likely to switch.
It turns out that retailers’ contracts with their providers requires them to still take a signature on the PIN pad. While this is not a deal breaker with shoppers, it is an odd annoyance. You’ve just used your fingerprint to validate that you’re you. I’ve never understood what the squiggles line on the PIN pad quite proves.
I also think this puts the final fork in MCX. Integrated loyalty was its only obvious consumer advantage.
Making consumers and retailers comfortable with the security of Apple Pay is essential for success. Linking payment with rewards programs is a change that will be attractive for retailers. Reminding consumers that Apple Pay can be used with specific retailers during checkout will also be helpful.
There’s no question Apple is serious about growing this end of its business and, when Apple gets serious, it generally pursues its targets pretty aggressively.
The real issues here are: how much linkage between products and services do consumers really want/; and, how many payment options are one too many?
Last week I bought a new Macbook to replace my vintage (2008) edition. As I was synching all my devices together it occurred to me that Apple had a lock on a disproportionate amount of my digital life (music, Cloud, photos, social media, work life).
How would I feel about putting my financial transactions and records in their hands? Now that you mention it, I believe it might take some more serious thought.
The payment wars are now over, and Apple has won, obviating the MCX business model.
The challenge now for Apple will be to find a compelling way to lure Android users away from their phones and onto the Apple platform. A tighter relationship with retailers to enhance the mobile shopping experience might be one avenue.
Apple Pay is certainly on their way to greater adoption. This is a very smart move and of course the number of iPhone users alone is enough to sway merchants to join in.
The only thing is…why can’t my payment choice be simply that, a choice, and not tied to the phone I am using? My suggestion is that Apple tuck that in their thinking cap.
And that’s my 2 cents.
Not only is Apple putting the final touches to other consumer loyalty programs, it is also pushing the Android users to make a hard decision when it comes time to decide what smartphone to get at renewal time.
Consumers looking for loyalty and discount benefits will bypass Apple Pay for bank and retailer credit. Apple will see a better opportunity against PayPal. With all the pressure for consumer free apps, I am not so sure the costs for this effort will be looked back on as a good idea. The credit market offering Apple a legitiment piece of the pie is becoming a bit over populated as consumer credit worthieness continues to decline.
I think Sucharita is spot-on on this one. Apple is slowly but surely sweetening the deal for shoppers/retailers. The more seamless the experience becomes, the more value they’ll find in adopting it.
Safety and security will be the biggest hurdles Apple will have to overcome to increase market share in the mobile payment space. Not to mention all of those Android users.
I think privacy concerns are still a barrier to adoption. The industry needs a new way to talk about data and privacy. It needs to be positioned as the advance that it is. If retailers transparently explain the benefits that come when shoppers are known and offer clear ways to opt in or out, the fears will subside and acceptance increase.
The short answer is…yes. For Apple Pay—or any alternative system—to work, it has to be simple and almost seamless. If I’m used to paying with my Discover card and can’t do it on Apple Pay, then the Apple Pay system doesn’t work for me. So, for Apple Pay to achieve greater market share and wide spread adoption, it must have the same basic benefits as any other typical payment system, plus the added benefits that Apple Pay’s solution offers.
The adoption issue in chain stores is not driven by technology, but by data. Chain stores have to be willing to give up some of the control of the credit card data that they have used in the past to match newly identified customers to past transactions.
The acceptance of loyalty card data is one step in that direction and may drive chain acceptance, since stores can track transactions back to customers through the loyalty card and thereby obtain the data that they need. That approach may overcome some of the hurdles that chain stores have faced in accepting Apple Pay.
These changes will definitely lead to greater adoption by chain stores as they provide more value to consumers and do it in such a way that the retailer’s brand is prominently visible—these are both very important aspects that were sorely missing initially. But it also shows, so soon after Apple Pay’s initial launch, that the company is on a deliberate path to enhance the mobile payment capability, which makes it worthwhile to invest in support thereof.
Apple’s two biggest challenges for now remain (a) the fact that retailers need a partner capability to support Android-based payments (at least) since Apple Pay is not portable, and (b) that cards and cash remain the primary forms of tender for the large majority of consumers, even though this is gradually showing signs of changing. Besides these, the task of onboarding banks and retailers beyond the US and UK will be a big effort, spread out over many years. All three of these challenges can probably be summed up in a word: ubiquity.
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Yes, the integration to loyalty programs is very important for adoption I think.
I don’t see a lot of challenges to Apple Pay achieving greater market share beyond time—the refresh cycle for existing iPhone users holds it back, and the fact that Android users are not likely to switch.
It turns out that retailers’ contracts with their providers requires them to still take a signature on the PIN pad. While this is not a deal breaker with shoppers, it is an odd annoyance. You’ve just used your fingerprint to validate that you’re you. I’ve never understood what the squiggles line on the PIN pad quite proves.
I also think this puts the final fork in MCX. Integrated loyalty was its only obvious consumer advantage.
Making consumers and retailers comfortable with the security of Apple Pay is essential for success. Linking payment with rewards programs is a change that will be attractive for retailers. Reminding consumers that Apple Pay can be used with specific retailers during checkout will also be helpful.
There’s no question Apple is serious about growing this end of its business and, when Apple gets serious, it generally pursues its targets pretty aggressively.
The real issues here are: how much linkage between products and services do consumers really want/; and, how many payment options are one too many?
Last week I bought a new Macbook to replace my vintage (2008) edition. As I was synching all my devices together it occurred to me that Apple had a lock on a disproportionate amount of my digital life (music, Cloud, photos, social media, work life).
How would I feel about putting my financial transactions and records in their hands? Now that you mention it, I believe it might take some more serious thought.
The payment wars are now over, and Apple has won, obviating the MCX business model.
The challenge now for Apple will be to find a compelling way to lure Android users away from their phones and onto the Apple platform. A tighter relationship with retailers to enhance the mobile shopping experience might be one avenue.
Apple Pay is certainly on their way to greater adoption. This is a very smart move and of course the number of iPhone users alone is enough to sway merchants to join in.
The only thing is…why can’t my payment choice be simply that, a choice, and not tied to the phone I am using? My suggestion is that Apple tuck that in their thinking cap.
And that’s my 2 cents.
Not only is Apple putting the final touches to other consumer loyalty programs, it is also pushing the Android users to make a hard decision when it comes time to decide what smartphone to get at renewal time.
Consumers looking for loyalty and discount benefits will bypass Apple Pay for bank and retailer credit. Apple will see a better opportunity against PayPal. With all the pressure for consumer free apps, I am not so sure the costs for this effort will be looked back on as a good idea. The credit market offering Apple a legitiment piece of the pie is becoming a bit over populated as consumer credit worthieness continues to decline.
I think Sucharita is spot-on on this one. Apple is slowly but surely sweetening the deal for shoppers/retailers. The more seamless the experience becomes, the more value they’ll find in adopting it.
Safety and security will be the biggest hurdles Apple will have to overcome to increase market share in the mobile payment space. Not to mention all of those Android users.
I think privacy concerns are still a barrier to adoption. The industry needs a new way to talk about data and privacy. It needs to be positioned as the advance that it is. If retailers transparently explain the benefits that come when shoppers are known and offer clear ways to opt in or out, the fears will subside and acceptance increase.
The short answer is…yes. For Apple Pay—or any alternative system—to work, it has to be simple and almost seamless. If I’m used to paying with my Discover card and can’t do it on Apple Pay, then the Apple Pay system doesn’t work for me. So, for Apple Pay to achieve greater market share and wide spread adoption, it must have the same basic benefits as any other typical payment system, plus the added benefits that Apple Pay’s solution offers.
The adoption issue in chain stores is not driven by technology, but by data. Chain stores have to be willing to give up some of the control of the credit card data that they have used in the past to match newly identified customers to past transactions.
The acceptance of loyalty card data is one step in that direction and may drive chain acceptance, since stores can track transactions back to customers through the loyalty card and thereby obtain the data that they need. That approach may overcome some of the hurdles that chain stores have faced in accepting Apple Pay.
These changes will definitely lead to greater adoption by chain stores as they provide more value to consumers and do it in such a way that the retailer’s brand is prominently visible—these are both very important aspects that were sorely missing initially. But it also shows, so soon after Apple Pay’s initial launch, that the company is on a deliberate path to enhance the mobile payment capability, which makes it worthwhile to invest in support thereof.
Apple’s two biggest challenges for now remain (a) the fact that retailers need a partner capability to support Android-based payments (at least) since Apple Pay is not portable, and (b) that cards and cash remain the primary forms of tender for the large majority of consumers, even though this is gradually showing signs of changing. Besides these, the task of onboarding banks and retailers beyond the US and UK will be a big effort, spread out over many years. All three of these challenges can probably be summed up in a word: ubiquity.