Apple Pay Adoption – Is The Novelty Factor Wearing Off?

By | May 10, 2016
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Apple Pay usage trends

 

Released in the fall of 2014, Apple Pay has fast emerged as the most popular mobile payments and digital wallet service in the world. A survey in March 2016 reported that the service has more than 12 million monthly users – comfortably more than any of its rivals (read: Samsung Pay, Android Pay). However, a closer look at the adoption figures of Apple Pay would reveal that Tim Cook’s prediction of 2015 being the “Year Of Apple Pay” has not quite materialized. Over here, we take a sneak peek at how Apple Pay has done over the last 15 months or so, and whether users are indeed losing interest in it:

  1. Gradually declining percentage of Apple Pay users – This one should probably get the alarm bells ringing at the Cupertino company. While the initial hype about Apple Pay worked like a charm and there was a huge number of early adopters worldwide – this figure is showing signs of tapering off. During 2015 Q2, the usage of Apple Pay fell by more than 16 percentage points (from 39.3% to 26%) for any particular transaction. In general too, the total number of users of the service slacked off from 15% to 13%. Contrary to predictions, as iPhone 6 sales have risen, the percentage of Apple Pay users has drooped.
  2. iPhone 6 is not driving up Apple Pay adoption – There had been many reports from software and iOS app development forums about how iPhone 6 will be instrumental in bolstering the adoption rates of Apple Pay. Things have, unfortunately, not panned out that way – with a measly 3% of respondents in a survey citing the contactless payment service as the reason they bought the iPhone 6 in the first place. The larger screen size and the superior camera capabilities remain the top 2 reasons for purchasing the flagship model (26% and 21% respectively), while the availability of new iPhone apps is also a big motivating factor. Apple Pay does not even come close.
  3. The uncertainty factor – The number of retailers accepting payments via Apple Pay has been increasing at a fairly rapid clip in the United states, but uncertainties still linger. Nearly 1 out of every 3 people with Apple Pay-enabled iPhones reported that they did not use the service simply because they were ‘not sure whether Apple Pay would work at a store’. Interestingly, another 30% users also stated that they had ‘forgot’ that they could pay through their iPhones via Pay. It is fairly evident from these stats that Apple Pay is yet to become the go-to payment option for people – and neither are they sure about where they can use the service.
  4. Flat adoption curve – As many tech experts and mobile app developers had noted, the initial hype about Apple Pay helped it get off to a fast start. The service debuted in October 2014, and by November – almost 9% of compatible device owners had tried it out. The good news for Tim Cook and his team ends there though – since the growth of Apple Pay has been anything but remarkable since then. By March, the adoption figure had crawled to just a shade above 15%, and in October, less than 17% iPhone users tapped on Apple Pay. More worryingly, the count of regular Apple Pay users has dropped from 19% to 15% – a clear indication that many users have tried the service, not found it to be as amazing as promised, and have not bothered using it again.
  5. Availability of other options – Google Wallet tanked in a big way, and when Apple Pay was launched, it was, for all practical purposes, the only available mobile digital payment service out there. Not surprisingly, tech-savvy iPhone users warmed up to this new technology – boosting the early adoption of Apple Pay. Things are no longer the same at present though, with Android Pay and Samsung Pay having emerged as viable alternative options. Interestingly, although Apple Pay has more than a year’s headstart over its rivals and about two times the user-base – at least Samsung Pay is growing at a faster rate than Apple Pay. The first-mover’s advantage that Apple Pay enjoyed at the start has all but evaporated.

Note: The newer players, however, are not going to catch up with Apple Pay any time soon. The usage of Samsung Pay is at little as 4% on compatible devices, compared to the 6% figure that Apple Pay has. Android Pay is used on a tick over 1% of all compatible handsets.

  1. No significant advantage over conventional card payments – According to a senior Mastercard spokesperson, contactless payment systems like Apple Pay are supposed to be almost 60% faster than normal card payments. Once again, this has only remained true in theory – with users in general finding no extra motivation for using Apple Pay instead of their credit cards. Less than 51% respondents in a recent study felt that the digital payment service is ‘much speedier’ than the card payment process, while only 55.6% people opined that Apple Pay was indeed more convenient. The overall ease of use figure is also not quite in favour of Apple Pay – with 47% people favouring it, and 48.6% being indifferent between using the service and credit cards (the rest stated that card payments were easier). Going by these figures, it seems like Apple Pay has not delivered any great additional advantages that would have motivated people to switch from card payments.
  2. Many other reasons of not using Apple Pay – We have already talked about the significant number of people who either ‘forget’ to use Apple Pay, or are not certain about whether they can use it at a store. Reports from app development experts have revealed that the reward points available on other contactless payment services had lured away 11% of users, 3% people thought that the service might malfunction, and 5% of the user-base felt that Apple Pay was not fast enough. What’s more – on average, 1 out of every 10 people could not use Apple Pay simply because they were not carrying their iPhones with them!

Note: There are, at present, way too many reasons for not using Apple Pay. The Cupertino tech giant has a tough job on its hand, to make the service universally accepted.

  1. Good growth as in-app purchase payment medium – Not all is doom and gloom as far as the adoption rates of Apple Pay are concerned though. For one, representatives from leading iPhone app companies have reported that it is more than an handy tool for supporting in-app purchases (IAP) in freemium applications. Well over 130 apps were supported by Apple Pay at the start of 2016, and the number is growing every month. The number of tie-ups with banks is increasing steadily too (515 in September 2015; 930+ in January 2016) – another sign that usage figures can pick up over the long-term.
  2. Faltering frequency of Apple Pay usage – One thing is fairly certain – Apple Pay has not scored big on the user-experience front. During March last year, 48% of all eligible users used Apple Pay whenever possible. By the time October rolled in, the figure had dwindled to 35%. During the corresponding time-span, there has been a 5% increase in the number of people who use the service ‘rarely’ (22% vs 17%). Security concerns over the use of Apple Pay is an important factor as well, with nearly 20% of users not using the service precisely for such reasons. Interestingly, 6.3% people reported that they were facing problems while trying to register on Apple Pay. For most users, the Apple Pay roadmap has been a bumpy ride so far.
  3. Great for experimenting; not so much as a regular payments service – That’s what the stats about the use of Apple Pay suggest. A PYMNTS study in March 2016 reported that 23% of users are giving Apple Pay at least a try. This is a sign that lack of interest is not a problem the Cupertino company should lose its sleep over. The cracks lie elsewhere – namely, the lack of a committed user-base. There are plenty of first-time users of Apple Pay, but not many of them are game for repeat usage (between March 2015 and March 2016, the repeat user percentage dropped from 41% to 24%).
  4. Apple Pay is not getting everyone hooked – Adding to the woes of poor repeat users of Apple Pay is the fact that, a vast majority of iPhone 6/6S users do not even bother to use it. There is more than a million point-of-sale (POS) terminals in the US which support Apple Pay – but nearly 84% owners of compatible iPhone-owners avoid using the service. In other words, the probability of the Apple Pay service is less than 1 out of every 20 transactions. Not impressive.
  5. It takes time for new habits to replace the old ones – And that, according to software analyzers and those who make apps, is one of the main reasons why the adoption of Apple Pay has been patchy at best thus far. People have been making payments with cards for 40-odd years, and it would be unreasonable to expect that the new one-and-a-half-year old NFC-supported digital payment technology would replace it overnight. Adapting to something new takes time (even more so in this case, considering the serious nature of the service), and everything depends on how quickly (or if at all) people indeed change their established habits while making payments.

Tim Cook’s ambitious statements have brought Apple Pay under the scanner – and to be frank, it has not really become a favourite of customers in the United States, after a promising start. However, there are positives to look forward to in 2016 – first with the launch of Apple Pay in China in February, and the several new features – like browser integration and peer-to-peer payment support. Things have not been uniformly rosy for Apple Pay in 2015, but a strong turnaround in 2016 is definitely on the cards.

 

Hussain Fakhruddin
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Hussain Fakhruddin

Hussain Fakhruddin is the founder/CEO of Teknowledge mobile apps company. He heads a large team of app developers, and has overseen the creation of nearly 600 applications. Apart from app development, his interests include reading, traveling and online blogging.
Hussain Fakhruddin
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