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Major US retailer JCPenney shed some light on its decision to drop Apple Pay earlier this week. The decision reportedly applied to both its retail store and digital platforms.
Here’s what it means: JCPenney’s decision to stop accepting Apple Pay coincided with the April 13 deadline to support EMV contactless chip functionality.
The retailer suggested that Apple Pay wasn’t a popular payment method among customers.The Visa regulation deadline, which was initially set in October 2017, necessitates that legacy contactless magnetic stripe data technology be retired.
In a statement to TechCrunch, JCPenney noted that it wasn’t ready to comply, so it instead switched off all contactless payment options, which included Apple Pay. The retailer also explained that swiping or inserting credit cards is still accepted, which is "an option employed by the vast majority of JCPenney shoppers," which could imply that Apple Pay wasn’t a popular payment method among its customers.
That said, there was initial backlash among JCPenney customers who noticed the discontinuation of Apple Pay support, indicating some demand for the mobile wallet.
The bigger picture: These regulations could have broader implications on contactless payments if more merchants are unable to meet the deadlines.
- JCPenney is likely not the only retailer reliant on older terminals. Contactless cards and mobile wallets won’t work when tapped at terminals that still run on older contactless technology. And there are likely other retailers reliant on older EMV terminals, which could cause Apple Pay to lose more merchants in a similar fashion. Even temporary suspensions could hobble Apple Pay in the US, slowing the momentum it built up over the last year, which marked a wider merchant network and healthier adoption.
- Beyond Apple Pay, the large scale roll out of contactless cards in the US could be hindered by these regulations.Major US issuers and networks including JPMorgan Chase, Mastercard, Visa, and Wells Fargo, have all been moving it on contactless over the last year. That mainstream issuance is positioning the payment method to take off in the US, where currently just 5% of cards are contactless-enabled. But the migration to new EMV contactless standards could hinder the uptake of contactless payments if consumers have fewer places to spend them, as older contactless terminals will be disabled.
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