Apple Pay adoption rates climb
No doubt you’re hearing a lot about Apple Pay® and you’re wondering what it means for your business. How can you tell if it’s just hype or here to stay?
Unique to the iPhone 6 and 6 Plus is Apple Pay, Apple’s new way to pay “without the wallet,” launched October 20, 2014. Wallet-less payment methods have been touted for a while, but, in the beginning, there were clear differences in wallet providers. Apple’s attention to an innovative NFC antenna in the iPhone 6 allows consumers to just hold their iPhone near the contactless credit card reader and authenticate the transaction using the bio-metric Touch ID reader. Rather than having to open an app or wake a display, paying happens in one natural motion.
Early reviews of Apple Pay performance over the holidays cite low adoption rates among users who had the payment feature on their new iPhone. Very early mobile payments research, like that conducted by InfoScout regarding usage on Black Friday, revealed that of 408 Apple pay enabled shoppers who participated on their panel, only 4.6% used the payment method. Of the 95.4% that didn’t use it, 31% didn’t know the store accepted Apple Pay. That may be no surprise, as consumers could be unfamiliar with NFC enabled devices and don't know to look for the NFC symbol, often a series of curved lines, to identify payment locations that accept Apple Pay and contactless payments. In response to questions from InfoScout, only 9.1% of iPhone 6 and iPhone 6 Plus users had given it a try.
But, it’s still early. We're in the “first inning” of stats and usage as Tim Cook at Apple has described it.* And this very well could be a tortoise and hare situation with the long-awaited market demand for mobile being the impatient audience. A new report from ITG, a leading independent execution and research broker, revealed that Apple Pay was responsible for 1% of the total digital payment dollars spent in November.* 1% seems dismal, but a caveat is in order. Google Wallet launched in 2011 and accounts for 4% of digital payment dollars; however, it took Apple Pay only one month to nab their share.
Among those who have adopted it, there’s a huge amount of excitement and loyalty. According to the same InfoScout research, more than half of those who have tried Apple Pay say it is “amazing” and “easy to use” (52.6 percent). Only 3.5 percent found that it didn’t work and even fewer, 1.8%, said it was difficult to use. Of those who have tried it, 42.1% say they use it “every chance I get,” and another 35.1% whenever they can remember.
Let's not forget that payments are not only about consumer usage, but the merchants who offer it. Interest from small business owners is growing. Just a few months after launch, Apple Pay already works with most of the major credit and debit cards.* According to the ITG report, big retailer advocates of Apple Pay, like Whole Foods Market, are leading the charge with a staggering 20% of overall Apple Pay transactions. The same report indicates that other top Apple Pay retailers include Walgreens, McDonald’s, Panera Bread, and Subway are also seeing significant adoption.
Other industries are jumping on the bandwagon. In December, the New York Times published a quote from Alex Martins, chief executive of the Orlando Magic basketball team, saying that customers complained that the food and beverage lines are too long.* They’ve implemented Apple Pay to speed things up. And in September, Walt Disney World promised to accept Apple Pay by the end of the year.* It began accepting Apple Pay for tickets, merchandise and other items on December 24, 2014. Long known to be a leader in world-class customer experience, Disney may be a harbinger of the new payments experience.
Daniela Mielke says of the payments experience, “I think there are also other ways to make Apple Pay more plausible for consumers than just loyalty. The moment you can really leave your wallet at home, the moment you have your identity on your phone, the moment the acceptance infrastructure really takes off and you can just leave with just your phone – that’s when there’ll be a real consumer value proposition.”* – Apple Pay, The Road to Ubiquity, PYMNTS.com, November 21, 2014.
Those advancements to support the growth, value proposition, and Apple Pay adoption may be just around the corner. Coming in early 2015 is Apple Watch, a highly anticipated wearable watch with built-in Apple Pay functionality that relies on skin contact and a unique pin code to authorize Apple Pay. And Apple has recently applied for a patent, which describes a use case for an Apple Pay-enabled terminal with a fingerprint reader, which would allow users to leave their phone at home.
The 2014 holidays provide only a glimpse, a blip, in payments time. Only further time will tell us the future of payments.