Retailers slow to adopt Apple Pay; Samsung Pay delayed

In a year that was hyped for big growth of contactless payments systems, Apple Pay has been slow to gain traction and Samsung Pay will be delayed in getting off the starting block.

Working from the National Retail Federation's list of top 100 U.S. retailers, Reuters surveyed 98 companies that had physical stores, and interviewed analysts and others familiar with the payment system. The report found that many retailers remain skeptical.

Some of the top merchants said they use the mobile payment system, less than 25 percent said they currently accept Apple Pay and almost two-thirds said they will not accept it this year. Four retailers said they will join Apple Pay next year.

Retailers cited several reasons for not accepting the payment system, including insufficient customer demand, lack of access to data generated in Apple Pay transactions and the cost of the technology to accept these payments.

Whole Foods reported that 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.

Access to data is a big issue for Walmart. "One of the biggest concerns is data control," said Mario De Armas, Walmart's senior director of international payments.

"What is the return on investment?" asked Maureen Elworthy, director of treasury at supermarket operator Ahold USA. "The [return] is negative."

Many merchants are committed to CurrentC, another mobile payment system that will launch later this year and does not allow participating retailers to accept any other mobile wallet until 2016. Walmart is among the nineteen chains in the NRF top 100 that are in this group, although three have said they plan to accept Apple Pay by early next year.

In a survey of small retailers, 87 percent are not accepting mobile payments at this time, according to CAN Capital and Payment Week.

Target CEO Brian Cornell recently said he would "love" to get Apple Pay into Target stores, and has talked to Apple CEO Tim Cook about it. However, Target's transition to secure chip-and-PIN credit card acceptance in time for the holiday selling season is a higher priority. The chain was among the 19 retailers committed to CurrentC. Best Buy and Kohl's are among CurrentC devotees who have also signed on to Apple Pay.

Apple Pay is moving aggressively and issued a statement that disputes the Reuters report. "We've spoken to all of the top 100 merchants in the U.S., and about half will accept Apple Pay this year, with many more the following year," a company spokesperson told Reuters.

At this week's Worldwide Developers Conference, Apple announced that the payment system would support a rewards program as well as store-issued credit and debit cards with its new iOS 9 operating system. Kohl's, Walgreens, Wegmans, BJ's Wholesale Club and JCPenney are among the retailers participating.

Apple Pay's moves "add more evidence that the CurrentC approach may turn out to be a losing one," reported BostInno of the Streetwise Media network.

Meanwhile, Samsung Electronics has delayed Samsung Pay until September, when it can launch in conjunction with the Galaxy Note 5 device, Bloomberg Business reported. "The new service will likely be deployed on its next Galaxy Note device," said Claire Kim, a Seoul-based analyst at Daishin Securities. "The key is how fast Samsung will be able to expand the service to lower-end devices."

Samsung's next smartwatch, also expected in September, will have near field communications capabilities so it can be used with Samsung Pay, according to Reuters.

For more:
-See this Reuters article
-See this Apple press release
-See this Payment Week article
-See this BostInno article
-See this Bloomberg Business article
-See this Reuters article
-See this SlashGear article

Related stories:
PayPal, Samsung, Google put mobile payments in the spotlight
Apple Pay expands in apparel; Google sets Android Pay launch
This will be the year of Apple Pay
Trader Joe's testing Apple Pay; Alibaba talking to Apple
Apple Pay vs. CurrentC: the race is on

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