Apple Pay expands as it vies for broader acceptance

Published Nov. 25, 2015

NEW YORK — Apple's year-old mobile-payments service is expanding to more countries, banks and merchants as it faces growing competition and some challenges before it becomes as commonplace as plastic cards.

Apple Pay became available in Canada and Australia last week. Those are two countries where "tap" payments — tapping a phone or chip-embedded card to the store's payment machine — are already more common than in the United States. In those countries, however, Apple Pay is limited initially to American Express cards.

In the United States, where Apple Pay started in late 2014, the service expanded last week to more than 100 other card issuers — mostly smaller banks and credit unions. Apple Pay already accepts Visa, MasterCard, American Express and Discover cards from most major banks.

The developments come a few months after Google launched its own tap-and-pay service, Android Pay, while Samsung started Samsung Pay. Both are for Android phones, while Apple Pay requires iPhones.

Jennifer Bailey, Apple's vice president for Apple Pay, said the company is starting with American Express in Canada and Australia because it's both the card issuer and the payment-network operator, so coordination is easier. With Visa and MasterCard, individual banks issue the cards, and each bank has its own way of verifying a customer's identity when setting up Apple Pay, for instance.

Meanwhile, Apple is working with makers of various payment machines to bring tapping capabilities to additional merchants, small and large. When Apple Pay launched, the United States had 200,000 tap-capable machines. That's expected to surpass 1.5 million this year. The growth includes about 100,000 small to medium-sized merchants each month, Apple said.

Apple said last week that Cinnabon will add Apple Pay to all U.S. locations next year, while Domino's company-owned pizza stores will get it by year's end.

Despite the momentum, several million more U.S. retailers still have older machines that lack the right technology.

Even if a merchant has the equipment, it's often located behind a counter, out of arm's reach. At sit-down restaurants, it's not practical for people to get up to make a tap at a counter. Most prefer leaving a card with a waiter, at least in the United States. (In Canada and many European countries, it's common for staff to bring a portable card machine to your table.)

Addressing that will require many approaches, Bailey said. "You'll see restaurants really look to innovate," she said, adding that restaurants can squeeze in more customers with faster payments, and people are happier not waiting for the check.