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Why Do So Few Merchants In San Francisco Accept Apple Pay?

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Why do so few merchants in San Francisco accept Apple Pay, in contrast to international cities including London, Paris, Dubrovnik, Moscow, etc.? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Mathew Lodge, Tech executive, on Quora:

It’s not San Francisco, it’s the entire United States that has a problem. Apple Pay requires a payment terminal that accepts wireless payments, and very few US banks issue credit or debit cards with wireless tags in them, so most US merchants don’t have wireless capability in their terminal. In the rest of the world, wireless payments with cards are incredibly common for their convenience value so every payment terminal accepts them, and that allows Apple Pay to work just fine.

I have 6 US credit and debit cards for various purposes, and only one has a wireless payment capability — my corporate credit card from Silicon Valley Bank. All my UK cards support wireless payment.

Even when the terminal accepts wireless payments, many payment processors in the US have not updated their systems to support Apple Pay (or Samsung Pay or any of the alternatives) because there isn’t much demand. Chicken and egg problem. So Apple Pay doesn’t work.

The payment terminal at my local dry cleaners has no wireless hardware, even though the firmware running on it says it supports Apple Pay. The local drug store has terminals with wireless capability, but it wasn’t turned on for years. It is now, but Apple Pay isn’t supported. My local grocery store supports Apple Pay but it asks for a PIN code (you must press Enter on the terminal to ignore that) and then you must sign a piece of paper that the terminal spits out, which makes no sense for a system that cryptographically signs payments and verifies biometric identification of the card user. The local hardware store’s terminals don’t even support using the chip on a card. They have cardboard stuffed into the card slots with a hand-written notice to swipe your card using the magnetic stripe reader. All of these are common payment alternatives in the US today.

The US is one of the most backwards countries in the world for payment systems because the merchants take all the risk of fraud or abuse, and accepting Apple Pay doesn’t make you a better card issuer with more customers. Apple Pay is competitive. The banks just pass chargebacks directly onto the merchant and credit the client’s account. So they have little to no interest in improving payment systems. Only new payment processors looking to disrupt the market, like Square and others, are interested in solving for things like Apple Pay. Their terminals fully support Apple Pay, but most retailers operate on very thin margins and don’t want to buy new terminals.

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