Apple Pay is technically very cool. It has many devoted fans and is growing overall. However, despite its popularity in geek circles, it is not being embraced by the majority of those who are capable of using it. The problem has many aspects that, altogether, create a continuing challenge for Apple. A recent analysis of Apple Pay delves deeply into its slower than desired adoption.
Apple Pay Introduction
There have been many articles about Apple Pay, how to use it, where it’s accepted and Apple initiatives in foreign countries. It’s easy to find basic statistics about participating banks in the U.S. and elsewhere.
One article I can recommend that covers vast ground is at MacRumors “Apple Pay: Everything We Know.”
But Wait. A Deeper Analysis
Despite Apple’s enthusiasm and the embrace by banks and some high profile merchants, not everything is peachy keen with Apple Pay. Just about all of the fundamental issues that are holding Apple Pay back have been thoroughly diagnosed by Karen Webster at Pymnts.com. It’s all in this tour de force analysis: “Apple Pay’s Tough Twenty Months.” There, Ms. Webster digs deeply into the social forces and Apple strategy that have cast Apple Pay into a slowly growing but struggling affair instead of a consumer sensation used by all.
This is a long but well researched article that’s worth reading when you’re done here.
Much of the Apple Pay “problem” stems from consumer psychology, something that only recently has been well understood. I first dug into this back in June with “Many Apple Pay Customers Confuse Simplicity with Vulnerability.” But misperceptions about the security of Apple Pay aren’t the only obstacles. When Apple customers who have the ability to use Apple Pay are asked why they didn’t use it for a particular transaction, answers are, in order:
- I am satisfied with my current payment method.
- I am not familiar with how Apple Pay works.
- I have security concerns about Apple Pay.
- I had not heard of Apple Pay before this survey.
- I tried registering a card with Apple Pay, but it didn’t work.
To be sure, while people who are not enthusiastic about being a visible Apple techie have subjective reasons for not using Apple Pay, there are also commercial reasons for the lack of stellar adoption, namely merchant reluctance.
On the bright side, Apple has some big numbers to boast about.
Apple says that number [merchant locations] is north of 2 million worldwide, some 1 million in the U.S. (Of course, in reality at most of the places in the U.S. where people spend money, you can’t use Apple Pay because they still have not turned on NFC. Apple’s numbers also include vending machines where they are getting traction….
However, that number could be a lot higher. It’s likely that the slow rate of adoption of Apple Pay is related to the financial and psychological forces that have slowed the adoption of chipped credit cards. For a related analysis of that, see this excellent article at Quartz: “The chip card transition in the US has been a disaster.”
This Quartz article points out that consumers don’t like waiting for the chipped card transactions to complete and that small merchants, faced with the EMV Liability Shift, have weighed the costs vs. security risks and decided to not make the investment. At least for now. This article paints a depressing picture of competing interests.
When trying to figure out who’s to blame, you end up with a weirdly tangled web of misaligned incentives. Almost everyone involved—banks, credit-card companies, retailers and merchants, payment processors, terminal manufacturers—have been focused on their own bottom lines, rather than the impact their decisions will have on customers. And that’s created a maelstrom of incompetence.
The Apple Watch
A large part of the (in)convenience factor related to pulling an iPhone out the pocket or purse and logging in is solved by the use of the Apple Watch. However, the Apple Watch hasn’t been overtly marketed as a joyful Apple Pay experience, and too many potential customers don’t seem willing to purchase an Apple Watch for just that solution. Whether this reluctance can be defused in the future with ever more capable and perhaps less expensive Apple Watches remains to be seen.
Next page: The final piece of the puzzle. Can Apple fix it?