The wider implications of why JCPenney stopped Apple Pay

Last week it was reported that one of the major US retailers JCPenney stopped support for Apple Pay. Was it dues to low usage in-store? No was the repose, it was to limit the damage from a wider payments industry issue in the US market.

However, the stoppage of Apple Pay, even if a temporary suspension, could harm Apple Pay in the US, slowing the momentum it has built over the last year or so, which marked a wider merchant network and healthier adoption.

Beyond the Apple Pay story, JCPenney’s decision to stop accepting all contactless payments coincided with the April 13 deadline to support EMV contactless chip functionality. As of this date, all terminals at US merchants locations that accept contactless payments must actively support EMV contactless chip functionality, and the legacy MSD (magnetic stripe data) contactless technology must be retired.

In a statement to TechCrunch, JCPenney noted that it wasn’t able 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 implies that Apple Pay wasn’t a popular payment method among its customers.

The wider implication of this is of course that the large scale roll out of contactless cards in the US could be hindered by other retailers’ failure to comply with 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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