Apple Pay woos retailers with new features

Apple Pay is rolling out significant enhancements aimed at addressing retailers' concerns. The mobile payment program will now accept store-issued credit and debit cards and also support rewards programs.

The announcement was made on the first day of Apple's (NASDAQ:AAPL) annual Worldwide Developers Conference. Jennifer Bailey, VP of Apple Pay, said that retailers including Dunkin' Donuts, Kohl's, JCPenney and Walgreens will support the new reward card functionality.

Kohl's will be among the first retailers to integrate both its Kohl's private credit card and the Yes2You Rewards loyalty program within Apple Pay. The functionality will be in place by fall, in time for holiday shopping.

"Kohl's is committed to offering an easy and inspiring shopping experience and we will soon bring Apple Pay to customers in all of our 1,164 Kohl's stores nationwide, in time for the busy holiday shopping season," said Kevin Mansell, Kohl's president and CEO. "Supporting Apple Pay in Kohl's stores lets us offer customers a convenient mobile payment option that allows them to use their Kohl's Charge or other credit card while also earning points through Kohl's Yes2You Rewards loyalty program."

Some retailers may remain skeptical—less than 25 percent say they accept Apple Pay and nearly two-thirds said they won't accept the mobile payment this year, according to a Reuters survey.

Nevertheless, Apple is expanding its reach and announced plans to roll out in the United Kingdom in July, with support of eight of the largest banks there.

And small businesses will soon find it easier to accept Apple Pay with the introduction of Apple Pay Square, a card reader that lets businesses already accepting Square payments to accept Apple Pay, too.

Mobile payments mean different things to different retailers. Those with a more affluent customer base and the many trying to woo younger shoppers are more likely to adopt and see usage of mobile payment programs.

Nearly half of all shoppers are interested in using card-linked promotional offers, according to a new study by Forrester Consulting for Linkable Networks. Also, 78 percent of shoppers report using a debit or credit card to pay for every day staples including grocery items.

At Whole Foods, Apple Pay transactions accounted for 2 percent of its sales dollars in March and expects that number to increase. "Our shoppers are really enjoying the speed, convenience and security of Apple Pay," said Whole Foods spokesperson Michael Silverman.

One thing holding retailers back is access to, and control of, data. Something Apple CEO Tim Cook tried to address at a recent event hosted by the Electronic Privacy Information Center. Cook told the room that Apple doesn't want to profit from other companies data, a statement that could be aimed at retailers who collect and use proprietary data.

"[This may be] a pitch to Target and Wal-Mart, saying 'We will not take your data if you use Apple Pay,'" noted CNBC's Jim Cramer. "This is Tim Cook not just taking aim at his competitors, but saying [companies] should adopt Apple Pay."

But now that Apple Pay will integrate retail cards and loyalty programs, it becomes a more compelling program.

For more:
-See this Reuters article
-See this Apple press release

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