Apple Pay made a splash with news of its imminent arrival at Starbucks, KFC and Chili’s, but low adoption among iPhone users and a slow EMV transition suggests in-app availability may provide the bigger boost in the short term.

Retail adoption is one important piece of the puzzle for mobile payments, and with Apple Pay and Android Pay both making NFC the cornerstone of their services, they are likely to be embraced by many of the same retailers. Interestingly, it could be mcommerce payments – and not mobile proximity payments – that helps jumpstart adoption of Apple Pay and Android Pay.

“As more and more iPhone users upgrade to iPhone 6 or 6S, more developers will start to include an Apple Pay button in apps to make commerce easier,” said Nikhil Joseph,?analyst for emerging technologies service at Mercator Advisory Group.

“As more people see the button, they will start enabling Apple Pay on their phones and will start using it in store,” he said.

“This is significant.”

Roadblocks 
Several roadblocks have popped up in the transition to EMV terminals – which is also when many retailers become able to accept NFC payments – meaning a number of retailers are still not able to process these mobile payments.

The transition to EMV is not going smoothly. A number of retailers have not upgraded their terminals. Reports suggest there are between 400,000 and 1 million NFC-ready terminals installed.

A report from Boston Retail Partners forecast that 40 percent of the top 500 retailers will have updated to NFC terminals by the end of this year.

At the same time, there is growing concern that the EMV protocol may not be as safe as promised, especially since the new chip cards are not being provided with a PIN – which consensus seems to be is safer – and require a signature instead.

The upshot is that the in-store payments space is in flux, which may be keeping some retailers and some consumers away from making any changes to their current payment habits.

Mobile payments adoption
Apple Pay adoption is also still relatively low, a year after it was launched.

“The real question is how many users have actually enabled Apple Pay – at what rate are people pulling out their phones in store to pay for things?” Mr. Joseph said.

“There is very little data, but some suggests that less than 20 percent of iPhone 6 users and above with Apple Pay enabled have loaded a card and used it once,” he said. “That’s not much at all.”

Priceline.com’s Express Deals integrated Apple Pay for faster reservations

While the in-store mobile payments space is evolving slowly, there is clear evidence that Apple Pay can benefit in-app purchases. Although mcommerce is a small percentage of retailers’ overall sales, it is growing.

Mr. Joseph points to data from Merchbar about the benefits of integrating Apple Pay in its app, with the process of paying taking 80 percent less time via Apple Pay than for users who to have to enter in credit card information, helping to drive a higher conversion rate.

In-app purchasing
Right now, Samsung Pay works at the most number of retail locations because it leverages legacy magnetic stripe technology.

However, once again it could be the mcommerce play that has the bigger influence on long-term viability.

“All Samsung phones are Android phones,” Mr. Joseph said. By default, they will have Android Pay.

“If you want to pay for things in the Android ecosystem, in-app purchases need to use Android Pay,” he said.

Given these factors, in-store mobile payments could take a year or longer to take off.

In the mean time, retailers should be focused on integrating Apple Pay into their apps.

“It’s going to take longer than a year [for mobile payments to evolve at retail],” said Thad Peterson, senior analyst at Aite Group. “Now that devices are shipping with NFC, the gating factor is going to be on the merchant side and NFC capable terminal growth will be on a more linear vs. a more exponential path.

“Online usage of mobile wallets should begin to increase more quickly now that all of the players are in market,” he said.

Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York