Apple, Nordstrom in Talks to Partner on Payments

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Department store Nordstrom is reportedly in talks to be one of Apple’s early merchant partners when the company unveils its new payments platform soon, according to sources with knowledge of the discussions.

Nordstrom employees have also given Bank Innovation new details on the company’s recent upgrades to its mobile point-of-sale terminals, which hearken to a deal with Apple.

Last quarter, Nordstrom generated about $3.4 billion of revenue. The company employs around 62,500 and has a market capitalization of slightly more than $13 billion.

The talks Nordstrom and Apple have been engaged are said to be related to payments — but the extent of those talks is unclear. Apple was looking for a clothing brand with a large physical reach to join its to-be-launched payments platform, our source said, but also with an established, high-end brand. With a strong brick-and-mortar presence and a focus on digital innovation, our source said Nordstrom was a “great” pick for Apple.

Nordstrom’s POS upgrade within the last couple of weeks offers another hint that it will be partnering with Apple.

Nordstrom employees, who requested anonymity, said that the department store chain upgraded its mobile POS terminals “a few weeks ago” with hardware that allow it to work with the “most recent iPhones.” Our source said that the two companies had a “contract” and that the specifics of these contracts weren’t available to the public yet. We verified that these terminals are the same ones that the Apple Store is currently utilizing.

Nordstom declined to comment for this article.

Nordstrom has a history of focusing on technological innovation, starting with the company’s widespread adoption of mobile point-of-sale terminals in 2012. The mobile POS worked with an iPod Touch at the time and helped Nordstrom increase its revenue by 12% year over year in the first quarter of 2012. Similarly, analysts, including Experian analyst Cherian Abraham, have been discussing Nordstrom and Apple on Twitter.

In May, Bank Innovation reported that Apple Stores throughout the country were receiving new mobile POS terminals to help Apple Store employees work with iPhone 5S, equipped with the Lightning pin, instead of the iPod Touch, which came with the outdated 30-pin adapter. This is the mobile POS now being used in Nordstrom stores.

At the time of the update, we wrote, “There does not appear to be a concrete reason why Apple is switching to the iPhone 5S, but it is not surprising.” We assumed that the upgrade was due to the iPhone 5S’s increased computing power and better overall performance. But, based on our conversations with Nordstrom employees and sources with knowledge of the talks, it looks like the purpose of the update was so that Apple’s existing merchant partners would be using mobile POS accessories with a Lightning port. Apple is expected to use the Lightning port in the iPhone 6.

Industry sources say that other merchants — like Ralph Lauren — have made similar upgrades to their mobile POS systems to work with the iPhone 5S.

Apple has partnered with other fashion brands in the past to unveil new products and features. Burberry premiered the new camera features in the iPhone 5S last September during the 2013 New York Fashion Week. At the time, the phone was announced, but hadn’t hit the shelves yet. Burberry used its Instagram account to show off the slow motion video feature in the 5S.

Retail industry insiders have indicated to Bank Innovation that there were other companies in the running to join Apple’s payments initiative. We were told that these merchants lost out to Nordstrom because they did not have many physical stores.

It is expected that Apple will introduce its new payments platform on Sept. 9.

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