Apple (NYSE: APPL) Pay could give small businesses an edge over larger competitors. Many large retailers are refusing to accept the mobile payment solution; even though most of them have the capability to do so.

The service has actually been available in the United States for nearly a year and a half, yet most of the country’s largest retailers have refused to take it or similar products from Alphabet (Android Pay) and Samsung (Samsung Pay). Yet a quick visit to the Apple Pay website, shows that most of the country’s largest retailers are not on the list of stores that take the solution.

America’s largest retailer; Walmart Stores Inc. (NYSE: WMT), largest grocer; Kroger (NYSE: KR), second largest discounter; Costco Wholesale (NASDAQ: COST), and largest online retailer; Amazon (NASDAQ: AMZN), are all refusing to accept Apple Pay. Two major US retailers; drugstore operator CVS Health (NYSE: CVS) and discounter Target (NYSE: TGT), actually turned off features on cash registers that would have let them take Apple Pay in fall 2014. Apple itself has failed to address this issue, even though the service is now available in the United States, Canada, the United Kingdom and Australia.

What is Apple Pay and What Are its Advantages?

For those of you who are unfamiliar with it; Apple Pay is a digital wallet similar to PayPal that is only available to iPhone users. The wallet takes the form of an app that can access a user’s bank account or credit card balance.

To pay; all a user has to do is touch the app this causes the iPhone to transfer money or credit directly to the retailer. There are some advantages to this for merchants including:

  • Faster checkout time at the register. No swiping or customer searching for credit cards. This could speed up checkout times and encourage repeat business; because slow moving lines at the cash register are a major customer complaint.

  • The customer can access all of his or her credit card and bank accounts from one place making it easier and faster to pay.

  • Less work at checkout and in the back office. The money is transferred directly to the bank, which handles the paperwork.

  • Theoretically payment will be faster and the merchant will get her or his money sooner.

A major drawback will be the expense of buying and installing a new cash register that is equipped to take Apple Pay. Most such devices sold in the United States will also take Android Pay and Samsung Pay.

An Opportunity for Small Business

The opportunity this failure to accept Apple Pay provides small businesses is obvious and tremendous. Some very large competitors are refusing to accept a new payment option – that can be easily accepted with a new cash register.

Retailers especially those that receive a lot of walk in traffic, could increase sales by offering the solution. Several hundred financial institutions in the United States including banks, credit card companies and credit unions now support Apple Pay, yet many retailers are refusing to accept it.

A big advantage that both Apple Pay and Android Pay from Alphabet; the company formerly known as Google, offer retailers is the ability to accept lesser US credit card brands Discover and American Express without paying additional fees. Both those credit options are now supported on the US versions of Apple Pay and Android Pay.

This could be of tremendous use to retailers in tourist areas, and those that cater to pedestrians or runners who may not be carrying a wallet. It could also help retailers that handle a lot of drive-in business. A small convenience store could use Apple Pay to offer a service not found at nearby supermarkets, for example.

Apple Pay and Vending Machines

Another interesting opportunity created by digital wallets is to potentially increase vending machine profits. Coca-Cola (NYSE: KO) and companies like Cantaloupe Systems are already selling vending machines that can accept wireless payments.

Payment apps could increase vending-machine use by making it easier for people to pay. They could simply access their account balance rather than walking around the office trying to borrow money, or get change from coworkers. Accepting wireless payments could also make for less work for vending machine operators because there would be fewer coins to count.

More importantly, payment apps could give vending machine operators a regular cash flow that they could tap almost instantly. There would be less time spent counting money or making bank deposits. This could reduce the work and expenses from vending machine businesses.

Increased Revenue for Vending Machine Operators

There could be new opportunities as well; because vending machines in Japan and China already sell everything from mobile phones to rain coats. Vending machines in the United States and Canada, currently sell mostly snacks and drinks. Entrepreneurs could take advantage of Apple Pay and Android Pay by rolling out new vending machines that accept digital wallets; but sell a wider variety of merchandise.

A fascinating opportunity in the United States or Canada; where most people own vehicles, would be to create drive-up vending machines that take wireless payments. Another would be to put such vending machines into the growing number of transit stations in American cities like Denver and Los Angeles; where commuter rail systems are expanding.

There will be many other opportunities created by wireless payments. Entrepreneurs that familiarize themselves with Apple Pay will be in a better position to take advantage of them.


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