Apple reportedly building rewards program to boost Apple Pay use

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Apple watchers and tech journalists have been working their way through the list of Apple Pay partners to make sure the mobile payments service works as promised. But beyond the first burst of excitement, how can Apple convince regular folks to replace their wallets with iPhones?

Getting the largest banks, credit card companies, retailers, and apps on board is a start. But Apple is reportedly working on a loyalty program that would reward you for using Apple Pay, and if there’s anything people love more than new Apple devices, it’s free stuff. According to financial blog Bank Innovation (which has reported several accurate Apple Pay-related rumors in the past), the program uses Apple’s iBeacons, low-energy Bluetooth-powered push notifications based on your specific location, to alert you to in-store deals. Of course, you only get the discount or free merchandise if you use Apple Pay.

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So when does this rumored rewards program kick off? Well, the timing is still a little murky. Digiday reported that Apple plans to add a buy button to the mobile ads it serves up in apps as part of its iAd network before the holiday shopping season kicks off. Paired with Apple Pay, the buy button would serve as an easy way to complete a purchase. Spot an item you want? Simply tap the ad’s buy button, verify your purchase with Touch ID, and you’re done. According to Digiday, mobile ads will also include coupons that you can add to Passbook and redeem in-store, though it’s unclear if use of those coupons will be tied to Apple Pay.

In-app coupons and buy buttons could realistically arrive before the holidays, but an iBeacon-powered rewards program will likely take longer to build out. The Bluetooth iBeacons are physical touchstones that need to be placed around a store—or, in the case of Major League Baseball, a massive stadium—to push out hyperlocal notifications. Apple has been working with retailers to get those iBeacons in place, but it’s not a fast process.

Why this matters: Apple Pay’s list of partner stores and apps is growing but still small, so iPhone 6 and 6 Plus owners may only use it sparingly at first. Offering free merchandise and discounts is one way to boost adoption while Apple builds up its network of merchants that accept the new payment service.

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