Apple is moving quickly to grab a larger slice of the mobile payments universe.

Apple Pay is on track to become available in more than 1 million U.S. locations by next month and is expanding to 250,000 retailers in the United Kingdom, said Jennifer Bailey, vice president of Internet services.

Apple is also linking Apple Pay to its Passbook mobile app, which stores digital coupons, gift cards, sports tickets and airplane boarding passes. Passbook will be renamed Wallet, which will also store-issued credit and rewards cards.

Retailers like Trader Joe’s, Best Buy, Baskin Robbins and Forever 21 now accept Apple Pay at checkout. But the company is also lining up reward card programs with a long list of stores, including Walgreens, Coca-Cola, Dunkin’ Donuts, Panera Bread and Wegmans Food Markets, and store-issued cards from Kohl’s Department Stores and JC Penney’s.

And store-issued cards will soon be available for customers of stores like BJ’s Wholesale Club, Kohl’s Department Stores and JC Penney’s.

Apple Pay, which is trying to stay ahead of new competitor Google Pay, lets iPhone 6, iPhone 6 Plus and Apple Watch users pay with just a tap of their devices, reducing the need for cash or debit and credit cards.

San Francisco’s Square, which makes a credit-debit card reader, also jumped on the bandwagon by introducing an updated $49 Square card reader that will accept Apple Pay.

Square is offering 250,000 of the new readers for free, plus additional readers that come with a $49 rebate, for business owners who pre-order on the Square website. The devices will start shipping this fall.

Earlier this year, Apple announced Apple Pay was in more than 700,000 store locations, not nearly enough to be a part of an everyday consumer’s habits, analysts said.

Apple Pay will only be accepted in less than 25 percent of the nation’s top retailers this year, according to Reuters.

Osama Bedier, the executive who led the launch of Google Wallet, said Apple Pay would need to be accepted in 35 percent of the nation’s 16 million store payment terminals that accept credit cards in the U.S. to “be relevant.”

“It’s still very long from consumers being able to use it in enough places so it’s top of mind,” said Bedier, who is now CEO of Poynt, a startup that sells payment terminals.

“Right now it’s a very interesting novelty. It shows you what’s possible,” Bedier said.

When it launched, Apple Pay received some criticism from consumers because it did not work with many store loyalty credit cards. For example, Apple Pay did not work with Macy’s credit cards, even though the retailer supported the program. Half of the sales at Macy’s take place on Macy’s store credit cards tied to its loyalty program.

Meanwhile, Apple Pay has its own share of competitors. Google announced at its developer conference in May that it will roll out Android Pay, its own mobile payment system, available at more than 700,000 store locations. And a group of retailers will also offer their own take with mobile app CurrentC.

Bedier said he expects mobile payments will become more widespread as retailers install payment terminals that have near-field communication technology at their stores.

Benny Evangelista and Wendy Lee are San Francisco Chronicle staff writers. E-mail: bevangelista@sfchronicle.com and wlee@sfchronicle.com