Massachusetts-based convenience store and gas station chain Cumberland Farms has rolled out Apple Pay support to all its 600 stores in the northeast and Florida.
I spoke to Dave Banks, CIO at Cumberland Farms, about how the rollout is going and how Apple Pay works from the retailers perspective.
The chain, which has some 200 stores in Massachusetts alone, wasn't planning on implementing Apple Pay support specifically. Instead, the company was in the midst of a normal refresh of the credit card swipe stations that are used at cash registers within the store.
"They were up for cycle anyway with EMV coming down the road," Banks explained, referring to the chip-and-signature standard that will be required starting a year from now. "Everything had an NFC reader and basically [Apple Pay] worked out of the box."
For Cumberland Farms, this meant that activating NFC support at its in-store cash registers involved minimal cost. "That's part of the smart timing by Apple," Banks says. "The mix has gotten a lot richer toward NFC." People are trying it out.
This is consistent with what a MasterCard executive told me a few months ago — that as companies go through normal upgrade cycles on their POS terminals, they'll be able to add NFC support for minimal cost as terminals will already have support built in.
From the retailers' perspective, an Apple Pay transaction is treated like any other swiped credit card transaction. A number is transferred through the system, the store requests approval of the payment, and it allows the transaction to proceed. On the back end, the store pays a small fee to the credit card company to process the transaction. This fee is identical for the store, regardless of whether the transasction is swiped or performed via NFC.
In fact, Cumberland Farms doesn't immediately know whether a transaction is done via a swipe or Apple Pay. Instead, it has to dive deeper into its POS system to see if a payment was made via mobile or not. Even then, it only says whether it was an NFC transaction — not whether it was Apple Pay or one of the competing NFC-compatible mobile wallets.
The chain has seen mobile NFC payments rise by quite a bit since Apple Pay was rolled out, yet it remains a tiny but growing fraction of its business.
Separately from Apple Pay, Cumberland Farms offers a smartphone app called SmartPay that allows customers to make payments from their smartphone in return for a $0.10 per gallon discount on gasoline purchases. The app works by tying a customer's checking account to the Cumberland Farms system via ACH transfer.
When a customer pulls up to a pump, they use the app to tell Cumberland Farms which pump they are parked at (the gas station is already identified through geolocation), and the transaction is immediately authorized. The company saves money on credit card fees, passing some of those savings onto the customer in the form of discounts on gasoline.
Because much of the backend gas pump authorization has already been built, Cumberland Farms is planning to introduce a new app using the Apple Pay API instead of NFC. Customers will select which pump their car is parked at in the app and then authorize an Apple Pay purchase with a thumbprint, much like they can do currently in the Target and Uber apps, without ever entering a credit card number specifically for the Cumberland Farms application.
This will make transactions more secure (there is a lot of credit card fraud at pay-at-the-pump swipe terminals) and could allow the company to offer more loyalty rewards for frequent buyers, including things like instant coupons to save on food purchases while they're filling up with gas.
Cumberland Farms hopes to have its pay-at-the-pump Apple Pay-compatible iOS app available in the first few months of next year, likely making it one of the first gas stations to offer Apple Pay at the pump.
Banks says NFC payment terminals will be slow to roll out on the gas pumps themselves because pay-at-the-pump POS terminals are more expensive than those used inside convenience stores, and the credit card industry is not pushing as hard to transition those terminals to the chip-and-sig EMV system that will be required next year at in-store locations.
Are you interested in using Apple Pay at the pump? Would you go out of your way to use the latest and greatest mobile payments services at a gas station? Let us know in the comments below.
Jordan Golson is an Apple Columnist for TechRepublic. He also writes about technology and automobiles for WIRED and MacRumors. He has worked for Apple Retail twice and has been writing about technology since 2007.