Banks, some retailers go along as Apple pushes cardless payments

It could be the beginning of the end of paying with plastic.

Apple Inc. on Tuesday announced a push into digital payments, a big step forward for a technology that's struggled for years to gain traction with American shoppers and merchants.

The iPhone 6 and Apple Watch the company unveiled will allow people to store their credit card data in Apple's Passbook and then pay with their smartphone.

Not everyone is on board. Best Buy has no plans to participate, and Target won't accept the payment in its stores for now.

But the big banks and credit card companies have signed up, and several massive stores and restaurants -- including Macy's, McDonalds, Staples, Subway, Walgreens and Whole Foods -- will accept the payment. U.S. Bank announced Tuesday that its credit and debit cards will work with Apple Pay later this fall.

"It's convenience plus security, which is a pretty powerful combination," said Dominic Venturo, senior vice president for innovation for U.S. Bank.

A big obstacle for consumers has been that not enough merchants would accept contactless payment using near field communication, or NFC, which transmits a radio signal from a device to a receiver when the two are close or touching. The NFC technology has been a feature for a year or so in other smartphones, but not in Apple devices until now.

Apple's ability to line up big names and presumably get the technology into the hands of a huge number of consumers could make for a tipping point. The Cupertino, Calif.-based tech giant says more than 220,000 stores accept contactless payment, and it is working with more merchants to accept it. The partnership with the major banks -- including Wells Fargo, Bank of America and Citibank -- adds up to 80 percent of all credit card volume, the company says.

A key to the payment technology is tokenization, which is becoming an industry standard, Venturo said. Tokenization means the actual credit card number isn't used to make the payment. Instead, another number, one that changes, is used to actually make the payment, which makes the transaction more secure.

"If the phone is lost or anything else that had the card data in it, we don't have to reissue the plastic and close the account and start all over," Venturo said. "We just have to disable that one token."

Minneapolis-based Target Corp. will accept Apple Pay through its mobile app. It will be available on Target's iPhone app next month in the U.S. for users who have updated to iOS 8 and make purchases from one of the new Apple devices. Target said Apple Pay will make paying for products by phone easier and more secure because customers won't have to fill out account information or shipping and billing information each time they make a purchase.

"We know mobile is becoming the front door to Target, and we're focused on creating the best possible mobile experiences for our guests," Jason Goldberger, a Target senior vice president, said in a post on a Target blog. "This absolutely makes purchasing from Target's mobile app easier than ever."

Eddie Baeb, a Target spokesman, said the retailer will not use Apple's payment system in its stores because it does not have NFC-enabled point of sale equipment.

Kavita Kumar contributed to this report.