Apple Pay now accepted at 35% of US merchants, coming to Gap and more in 2017

Apple Pay chief Jennifer Bailey onstage at Code Commerce. | Source: Re/code via Twitter

Headlining Re/code's Code Commerce conference in San Francisco on Tuesday, Apple Pay chief Jennifer Bailey said 35 percent of U.S. retailers now accept the company's fledgling payments service, a figure expected to grow substantially in 2017.

Given Apple Pay's current trajectory, Bailey estimates the current 35 percent adoption rate, which represents some 4 million locations, will grow to two out of every three retailers in the U.S. next year, reports The Verge. The uptick will be in large part due to participation from top retailers like Gap, which plans to accept Apple Pay at registers in the coming months.

Interestingly, Bailey believes the rise of EMV chip cards is helping to push consumers toward Apple Pay. In particular, customers are unsatisfied with the "dip to pay" method, a process that is confusing and cumbersome compared to Apple's touchless solution. At the same time, Apple is unwilling to tout NFC's benefits over EMV, at least not yet.

"Knocking EMV is not necessarily the way to go," Bailey said, adding, "I think it's to increase acceptance and work with great partners."

For now, Apple appears more concerned with building out a stable foundation than going toe-to-toe with EMV. The measured strategy is wise, especially considering retailers are being forced to upgrade their point-of-sale terminals to EMV-compatible hardware. In many cases, the updated card terminals also enable Apple Pay.

Apple's strategy appears to be working, as average monthly transactions are on the rise. In typical Apple fashion, Bailey declined to offer specific numbers.

Apple Pay is also seeing decent uptake beyond its domestic market. In Japan, for example, the payments service already has 1 million activated users just six weeks after launch, Bailey said. Integration with Japanese transit services, specifically Japan JR East's Suica transit card network, played a huge role in the Japan launch, and Apple intends to extend similar features to other markets.

As for Apple Pay's next act, Bailey hinted the product might one day replace physical wallets.

"Everything in your wallet we're thinking about," she said.