According to Parks Associates’ consumer data, about 9% of Apple smartphone users have used Apple Pay,1 and only about 3% use it regularly.2 2015 was “the year of Apple Pay” according to Tim Cook. Apple’s failing to gain adoption, right?3
No. Apple is focused on gaining merchant adoption before gaining consumer adoption. Here’s evidence that Apple’s focus for Apple Pay is not on consumer uptake: Apple’s iPhone 6, the first Apple phone that allows consumers to make contactless payments at a brick and mortar store, was released at the end of 2014, and its flagship commercial contains no mention of Apple Pay. The commercial shows someone paying with their phone for less than 2 seconds in a 60 second commercial.4 The theme of the commercial is “The only thing that’s changed is everything.” No “Now your phone does everything” theme, no mention of Apple Pay.
Apple touts Apple Pay to merchants. The Apple Pay fanfare comes in earnings calls, industry analysis, and meetings between executives. Apple wants merchant adoption first. To gain merchant adoption, Apple wants merchants to think that Apple Pay is the next big wave in payments and that they need to be prepared for it—and Apple wants merchants to think it’s worth paying more than 15 basis points to accept it. They’ve been successful, too—67% of U.S. POS merchants that requested information from their merchant service providers about mobile payments wanted Apple Pay—as opposed to Android Pay’s 18%, PayPal’s 18%, and Samsung Pay’s 7%.5 So far only 20% of merchant locations accept Apple Pay.6 When we see that percentage reach critical mass—definitely above 50%—we’ll see Apple start to advertise Apple Pay to consumers.
Apple doesn’t want its loyal customer base to be disappointed with a service that fails. Apple advertises products when they can ensure a complete user experience, and without sufficient merchant adoption, Apple can’t ensure that yet. Even though Apple is not focused on consumer adoption, Apple needs to have Apple Pay available to consumers for two reasons: 1) to show merchants that they have a product consumers will use, and 2) to have some early adopter growth stats to use to promote Apple Pay to merchants in earning calls (e.g. “In the second half of 2015, we saw a significant acceleration in usage, with a growth rate 10 times higher than in the first half of the year.” - Tim Cook, 2016 Q1 Earnings Call).
Apple is great at marketing—even to merchants—and they’re having success as a result. More merchants are accepting and requesting Apple Pay, Apple’s most loyal early adopters will continue to use Apple Pay when and where they can, Apple will use its international volumes and growth rate stats to drive U.S. merchant adoption, and Apple will wait until the time is right to advertise to consumers. When they do, we can expect a sharp increase in Apple Pay use.
1 Parks Associates’ consumer data, “Mobility & the App Economy 360 View Update – mCommerce and Entertainment Apps: Usage Trends,” 4Q 2015.
2 Track Apple Pay usage statistics here.
3 For reports that Apple Pay is failing, see Business Insider, “Apple Pay Is Showing Signs that It Could Be a Flop,” Dec. 3, 2015, and Seeking Alpha, “Explaining the Struggles of Apple Pay and Mobile Payments,” Mar. 14, 2016.
4 Apple iPhone’s official commercial, “The Only Thing That’s Changed Is Everything,” YouTube, published Sep. 9, 2015.
5 Teresa Rivas, “Apple Pay Most Requested by Merchants Adopting Mobile Wallets,” Tech Trader Daily, Mar. 2, 2016.
6 Parks Associates analysts’ estimates
