Chase is working with Apple to vet potential developers and merchants after more than 500 people attended and responded to Chase's two live webinars about its three Apple Pay developer labs in Columbus, Ohio, Tampa, Fla., and San Francisco, Calif.

More than 10 merchants are already building Apple Pay applications through access from Chase's API within the developer labs. Apple plans to make an Apple Pay update available to the public on the iPhone 6 sometime in October.

“I know it's working well at restaurants where there's tipping transactions,” said Russ Mahy, executive director of technology at Chase.

Approved merchants receive pre-released Apple devices with Apple Pay already in the operating system and can access the open programming tools to build payment apps. Chase employees working at the developer labs have also received pre-released devices.

“Chase employees...have these devices for testing functionality specifically,” Mahy said. “We're not to go into the McDonald's here and wave the phone around and say, 'Hey, look how cool I am'” using the iPhone to pay.

The early merchants include a local deli in Tampa that has integrated Apple Pay through Chase Paymentech point of sale device. The integration enables consumers to use customer-facing point of sale devices to select a tip amount and then tap their iPhone to make the purchase using Near Field Communication. The customer then receives a printed out receipt with the tip included.

Before this integration, the deli executed transactions by swiping a customer's card and presenting a printed receipt to the customer, which they would then sign, write in a tip and give back to the cashier.

The Tampa lab is the core site where most of the development is happening, said Mahy. As part of the program, Chase experts have a frequent tele-presence with developers at other labs to address questions.

“Apple is interested in cross vertical...they're already great at selling digital goods, so they're going after more of a traditional merchant where you're buying items that need to be shipped to the customer,” Mahy said.

While Apple and Chase aren't limiting the merchants it accepts to specific verticals or sizes, “we're being very judicious in our vetting with Apple,” Mahy said. Currently both large and small merchants and independent developers are working across the three labs.

In the developer labs, software development kits (SDKs) can be downloaded in a couple minutes and baked into an app within 30 minutes to start accepting transactions.

The early deployments will not only test how consumers use Apple Pay, but how merchants use developer toolkits to build payments interfaces, a process that is a challenge in the payments industry, according to Mahy. Adding complex libraries of programming code have caused performance problems for merchant payment apps in the past.

 “An SDK can mean anything,” said Mahy. “One of the real problems with SDKs is people writing poorly tested code, and you bind that into your app and it doesn't go well.”

Merchants are also worried about the perceived lack of control that results from using an SDK from a third party, a concern that particularly impacts complex merchants with large IT organization that can do more of their own programming, said Mahy.

 “The best way to lock any environment is to control it and not run foreign stuff,” Mahy said. “But when you write every line of code, you won't get as much done."

But one of Chase's advantages is its trusted brand recognition, he said. We work very heavily, because we're a bank and payment processor, on security aspects.”

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