Apple Pay transactions totaled $10.9B in 2015, suffers growing pains, report says

AppleInsider

Apple customers who provisioned credit and debit cards with Apple Pay made $10.9 billion in purchases in 2015, a report said Wednesday, suggesting the nascent payments service is -- slowly -- gaining momentum as the company expands beyond core markets.

Citing statistics from research firm Timetric, Reuters reports U.S. transactions accounted for most of the $10.9 billion sum, characterizing the figure as a "small dent" in the overall global payments market. The publication goes on to claim Apple Pay faces a tough climb internationally, saying resistance from banks and technical issues stand in the way of mass adoption.

Uptake appears to be relatively high with "core Apple followers," but the report lists a number of potential hinderances to wider acceptance by both consumers and banks. For example, Bendigo Bank, a mid-size Australian institution, experienced technical difficulties deploying Apple Pay at certain merchant terminals. A bank representative blamed the issues in part on short lead times for testing.

Apple Pay chief Jennifer Bailey reminded Reuters that problems are likely to arise with the launch of any new technology.

"Like any set of major technology changes, it takes time," she said. "We want to move as quickly as possible, we push it as quickly as possible."

The report went on to cite an anonymous Australian retailer as saying uptake has been slow, while unnamed users of a likewise unnamed Chinese online forum said Apple Pay usability compared poorly to local solutions like WeChat. Reasons for the slow-burn launch include pushback from banks over transaction fees, consumer apathy and technical hurdles tied to rolling out support for backend network technology, among other impediments. Little evidence was offered in support of these assertions, however.

Despite Reuters' classification as a revenue driver, Apple Pay is viewed in a somewhat different light by tech industry watchers. In particular, the initiative is less of a money maker than it is a value added iOS feature designed to increase platform stickiness. In this way Apple Pay is similar to the App Store and iCloud, both important cogs in a larger iPhone sales machine.

Unlike Apple's multi-region hardware product launches, Apple Pay was initially limited to the domestic market after its debut in 2014, and only recently has support been expanded to other major economies.

China is viewed as the most important of these secondary markets given the country's booming consumer base and mature payments infrastructure. Reports claim Apple went so far as to halve its normal going rate, thought to be 15 cents for every $100 in transactions, to get Apple Pay into China. Some 3 million cards were provisioned over the first two days of availability.

Apple Pay is currently live in Australia, Canada, China, Singapore, the U.S. and the UK. In the near term, Apple is focused on expansions into Asia and Europe, with an ultimate goal of serving all major markets in which its products are sold.

Apple has yet to break out official numbers for its Apple Pay business.

jungmark

Only 10.9 billion? Sell! 

I wish more locations use it. I've used it at Panera's and Best Buy. 

ireland

Original "report" is bull.

rogifan_new

How in the world would they know this?

sennen

"The report went on to cite an anonymous Australian retailer as saying uptake has been slow"

By banks, that is. There is only one bank offering Apple Pay here, we're all waiting for the rest of them to (work out the percentages with Apple and) jump on board.

edited June 2016

digital_guy

Likely struggling also because it's also facing some new, formidable
headwind. See:

ComputerWorld - EMV rules ruining Apple Pay :

http://www.computerworld.com/article/3074888/retail-it/emv-rules-ruining-apple-pay.html

Interestingly, I think most - if not all - credit cards have an area for the
cardholder's signature on back, and states, "Not Valid Unless Signed",
yet I have never seen any cashier check for any signature on the
back of any cards that we have ever had or used. There seems to
exist a double standard for authentication, depending on method used.

red oak

$10.5 billion would net Apple approx $15 million in revenue, assuming the reported .015% commission for all transactions.  Likely, the net is much smaller.  Then, subtract all the expenses including marketing and employees costs

Not good if true,given Apple has been at this for a couple of years  

lowededwookie

I'd use it if it was here in New Zealand.

tokyojimu

I use it sometimes just for fun, both in the U.S. and in Taiwan, but the truth is it's often slower than swiping and takes about the same amount of time as dipping. It really is a solution in search of a problem.

douglas bailey

I've been using it in Australia on my Apple Watch. Have only pulled out my wallet one time in the last month - since ANZ got ApplePay - for a transaction over $100 on a machine they told me wasn't configured properly. It should have only asked me for a pin at most. 

greginprague

tokyojimu said:

I use it sometimes just for fun, both in the U.S. and in Taiwan, but the truth is it's often slower than swiping and takes about the same amount of time as dipping. It really is a solution in search of a problem.

Apple Pay takes 2-3 seconds at most.  Dipping a chip card takes 13 seconds on average now.  What are you talking about?????

mattinoz

sennen said:

"The report went on to cite an anonymous Australian retailer as saying uptake has been slow"

By banks, that is. There is only one bank offering Apple Pay here, we're all waiting for the rest of them to (work out the percentages with Apple and) jump on board.

One bank and only one card type so far. Take into account with Amex lots of smaller retailers surcharge so don't even take tap'n'pay so they know to add the fee which means ApplePay doesn't work at all, and then you switch to another card.

It would be interesting to see take up for the Two major supermarkets, who both take amex fee free. 

doggone

I don't shop a lot but the only places that I use that offer Apple Pay are Whole Foods and TJs.  So not gas stations, convenience stores, restuarants etc.

That's the main problem, most banks cover Apple Pay but most vendors do not.

esquirecats

A few take aways from this report: Bendigo bank wireless terminals don't accept amex as pay-wave, in the time period listed amex was the only ApplePay option available in Australia. It likely has nothing to do with ApplePay as the devices simply don't work with Amex's pay-wave system. (Note: Bendigo bank is a relatively tiny bank in Australia, it's considered a "rural bank" and is no where near the top 5 banking institutions.)

Secondly, hearing discouraging remarks from Bendigo bank is hardly surprising with their Managing Director frequently commenting that services like Apple Pay / Paypal / et. al. represent a risk to their margins. I.E. They believe it's in their interest to discourage new payment methods.

The number of transactions in 2015 is relatively small for two obvious reasons: Most countries didn't have Apple Pay in 2015, the ones that did had it for only a few months and usually only on Amex. Secondly the only market with wide Apple Pay support is the USA, yet the USA has poor wireless payment penetration.

In 2016 and 2017 the story will be very different: There has been a sudden growth in regions that accept Apple Pay, and these regions have high penetration of wireless payment systems. With most of these regions only just beginning to get support for local banks (since Amex is a smaller player outside of the USA.)

sflocal

Gas stations, and watch ApplePay really take off.  

teejay2012

tokyojimu said:

.. the truth is it's often slower than swiping and takes about the same amount of time as dipping. It really is a solution in search of a problem.

Huh? Apple Pay is MUCH easier than chip and pin (with card), and using from an Apple watch is that much easier. Are you trying to pay holding the phone with your foot?

steven n.

tokyojimu said:

I use it sometimes just for fun, both in the U.S. and in Taiwan, but the truth is it's often slower than swiping and takes about the same amount of time as dipping. It really is a solution in search of a problem.

??? Are you kidding? I find it substantially faster than swiping and infinitely faster/easier than the chip and pin.  I use it daily.

BTW: its ultimate use case is vending machines. 

slprescott

steven n. said:

BTW: its ultimate use case is vending machines. 

Yes, I've used it at vending machines at (a) YMCA and (b) highway rest areas.

What a like about using Apple Pay with vending machines is that there's usually not a line of other customers waiting behind me, so I can use it -- as an experiment -- without holding up the line or risking annoying anyone if there's a technical problem.

("Holding up the line" is not implying that Apple Pay is slow; it's not.  But often a merchant's clerk is hesitant to have me try it because they haven't seen Apple Pay in use, and that hesitance can add a few seconds to the checkout process. With a vending machine, there is no person to voice hesitance.)

edited June 2016

slprescott

Calling year-1 billings of $10 BILLION small is amazing hubris.  Yes I realize that $10B is small as a percentage of global financial transactions, but it's still $10B which is a massive amount of money to pass through a new financial vehicle.

ericthehalfbee

I did about $1,000 last month on tap & pay, since most places I shop accept it. I'm not sure how many people in Canada will use it, but it would be interesting to see the dollar figures per user between us and the US to see what difference widespread NFC terminals have on usage.

brucemc

Right now I would say that Canada is the best Apple Pay market (per capita) with the major banks now on board, wide spread contactless POS terminals among merchants, and contactless amounts up to $100. On Apple Watch the convenience is great - double click, point and go - no need for wallet or phone.  No signatures.  I have used it about 5 times per day since it was introduced at my bank a few weeks ago, paying for Timmies, food, groceries, wine and beer, etc.