Study: Apple Pay at 9% adoption in US, lags far behind PayPal and traditional payment meth...

Posted:
in General Discussion edited December 2019
A new study finds Apple Pay adoption is rapidly growing in a number of major international markets including China, but it and other mobile payments services continue to languish in the U.S.

Apple Pay Cash


According to new statistics from management consultancy Bain, some 80% of Chinese consumers used some form of smartphone payments service last year, far higher than a U.S. adoption rate of 10%, reports CNBC.

Broken down by service, the Chinese market is dominated by local systems like WeChat Pay and AliPay, both of which enjoyed over 80% adoption rates in 2018. Cash, bank cards, credit cards and bank apps follow, with Apple Pay listed as the most-used foreign service with 17% adoption.

Gerard du Toit, partner and head of Bain's banking and payments sector, notes countries like China and India are ripe for penetration due to their reliance on cash.

"China and India have been very cash-based economies -- that has a pretty high hassle and friction factor," du Toit said. "Mobile payment is a dramatic improvement versus having to manage a whole bunch of cash."

Whereas Alibaba and Tencent offered attractive alternatives to traditional payments in a bid for Chinese consumer favor, India pushed the use of mobile payments to dissuade unrecorded cash transactions and thus reap consumption taxes.

The story is different in the U.S., where Apple Pay has a 9% adoption rate. By comparison, PayPal is used by 44% of American consumers, while credit card and cash boast respective adoption rates of 80% and 79%.

There is little incentive for consumers to ditch credit cards, the top form of payment in America, for a mobile payment alternative, du Toit notes. In some cases, swiping or inserting a credit card into a point of sale terminal is easier than pulling out an iPhone, unlocking it and tapping it on an NFC reader.

"A big driver of mobile adoption is just how big an improvement is it," du Toit said. "When it comes to the U.S., there is a good enough solution there already."

Integration is another issue. Credit cards are accepted by nearly all U.S. merchants and cash is, obviously, ubiquitous. Brick-and-mortar stores are beginning to adopt touchless solutions like Apple Pay, but the process often requires the purchase and installation of new hardware, as well as acceptance of an operator's terms.

The report goes on to note that consumers are unlikely to stray from the rewards that have become part and parcel of the credit card experience. Mobile services are working to integrate similar offers. The Starbucks app, which offers users credits that go toward free food and drink, is one example. According to eMarketer, Starbucks' system is the most used app in the U.S. with 23.4 million users, the report said. Apple Pay is a close second with 22 million users and is followed by Google Pay's 11.1 million adopters.

Apple is working to build out its rewards program with the recently released Apple Card, a branded credit card offered in partnership with Goldman Sachs. Through the Daily Cash system, users buying goods get a percentage of the purchase price back in cash, money that is automatically loaded onto their Apple Cash card for use or transfer to a bank account. Buying products and services from Apple nets 3% Daily Cash, Apple Pay transactions garner 2% cash back and all other purchases rate 1% back.

"The physical Apple card is going to drive liquidity into the mobile app, Apple Pay," said CB Insights senior analyst Arieh Levi. "That's not the only reason Apple is launching the card, but it's certainly a piece of it driving money to other parts of their ecosystem."

Apple CEO Tim Cook during the company's most recent earnings call in July said Apple Pay is seeing triple-digit growth around the world, with the service processing one billion transactions per month. The latter figure represents a two-fold increase from the same time last year.
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Comments

  • Reply 1 of 86
    "There is little incentive for consumers to ditch credit cards, the top form of payment in America, for a mobile payment alternative, du Toit notes. In some cases, swiping or inserting a credit card into a point of sale terminal is easier than pulling out an iPhone, unlocking it and tapping it on an NFC reader."

    WTF, does this guy have any clue on how Apple Pay works?  Apple pay is linked to a credit card.  You are not ditching anything.  Pulling a wallet then the card out of your pocket then sliding it into the reader is not easier than pulling out a phone and tapping it on the reader.  That's another joke.  And you don't have to unlock the phone, just double tap on a button. 

    So after reading that, why should I believe any of the stats that his company Bain offered up?  Does not even pass the sniff test.  Apple Pay has been out several years and it being accepted in more and more places.  Only 9%.  Who gave them those figures?  Why does Bain allow people like du Toit make ridiculous public statements like this in their name?

    Solilolliverbenji888ericthehalfbeeEsquireCatsAirunJaechiaStrangeDayslordjohnwhorfinaikisal
  • Reply 2 of 86
    rob53rob53 Posts: 2,485member
    Stores are still shutting off Apple Pay capability even though their POS hardware handles it. Home Depot is a perfect example. Until all POS hardware is forced to accept Apple Pay stores will continue to turn it off.  Of course users need to understand what they have and use it. 
    lolliverrazorpitflyingdpwatto_cobra
  • Reply 3 of 86
    Not a huge user of ApplePay but I would have thought 9% adoption wasn't bad...
    entropystmaywatto_cobra
  • Reply 4 of 86
    TomETomE Posts: 166member
    Walmart, CVS, etc would not take it.  Only recently has it started at CVS.  I am not sure about Walmart.

    razorpittmaywatto_cobra
  • Reply 5 of 86
    bageljoeybageljoey Posts: 1,915member
    I’ve been using it since the get-go. But i rarely could find a place where it was accepted, so I often didn’t ask. It’s much better now, and i use it much more than a physical card these days. 

    I wish there was a better system of identifying terminals. I don’t mind asking if a store has it, but my wife will not touch Apple Pay until acceptance is ubiquitous because asking would be very annoying to her. 
    AirunJaewatto_cobra
  • Reply 6 of 86
    I’d use ApplePay everywhere if everywhere accepted it and accepted it properly.

    One of the most annoying things is a place which accepts ApplePay and then I have to enter my PIN and interact with the terminal. As if a PIN is more secure than my facial scan... People running businesses don’t even get ApplePay.

    When I was in the UK more places accepted it and did it properly.
    razorpitAirunJaelostkiwiwatto_cobra
  • Reply 7 of 86
    blastdoorblastdoor Posts: 2,353member
    Apple Watch plus Apple Pay is killer — nothing to pull out of a wallet, faster than a chip reader, and no need to sign. Once you use it, it’s all you want to use. 
    razorpitGeorgeBMaccincymacCarnageAirunJaechiaChet-NYCflyingdplordjohnwhorfincaladanian
  • Reply 8 of 86
    entropysentropys Posts: 2,877member
    Not a huge user of ApplePay but I would have thought 9% adoption wasn't bad...
    Agreed. 
    indieshack
  • Reply 9 of 86
    "There is little incentive for consumers to ditch credit cards, the top form of payment in America, for a mobile payment alternative, du Toit notes. In some cases, swiping or inserting a credit card into a point of sale terminal is easier than pulling out an iPhone, unlocking it and tapping it on an NFC reader."

    WTF, does this guy have any clue on how Apple Pay works?  Apple pay is linked to a credit card.  You are not ditching anything.  Pulling a wallet then the card out of your pocket then sliding it into the reader is not easier than pulling out a phone and tapping it on the reader.  That's another joke.  And you don't have to unlock the phone, just double tap on a button. 

    So after reading that, why should I believe any of the stats that his company Bain offered up?  Does not even pass the sniff test.  Apple Pay has been out several years and it being accepted in more and more places.  Only 9%.  Who gave them those figures?  Why does Bain allow people like du Toit make ridiculous public statements like this in their name?


    This x1000.

    Absolutely ridiculous to think pulling a card from your wallet is easier than tapping your iPhone (or Apple Watch). This is before you consider the fact Apple Pay is actually more secure than using your card.

    I guess we’re lucky up here in Canada. Almost everyone accepts tap & pay (which means they accept Apple Pay by default). Two big holdouts are Home Depot and Walmart, which is why I refuse to shop there.

    I estimate 95% of my purchases are Apple Pay. The other 5% are the few stores that don’t accept tap or for purchases over $100.
    razorpitnot_antonAirunJaechiaStrangeDayslordjohnwhorfinlostkiwiwatto_cobra
  • Reply 10 of 86
    benji888benji888 Posts: 133member
    “In some cases, swiping or inserting a credit card into a point of sale terminal is easier than pulling out an iPhone, unlocking it and tapping it on an NFC reader.”

    Only someone who has never used it could write this statement! Total B.S, it is quite the opposite!! And, as already stated, only steps are:

    1) get your iPhone or Watch out and place near NFC reader
    2) use touch or Face ID and that’s it, easiest way to pay.
    (Actually, only one step, get your iPhone out, keep thumb on home button while putting it near NFC reader.)

    rob53 said:
    Stores are still shutting off Apple Pay capability even though their POS hardware handles it. Home Depot is a perfect example. Until all POS hardware is forced to accept Apple Pay stores will continue to turn it off.  Of course users need to understand what they have and use it. 
    This is the problem in the US!! I do recall being able to use Apple Pay at Home Depot, but, they, like others, have changed POS systems or payment services and they only accept chip or swipe cards now. Some places accept some NFC payments, but not Apple Pay. Some places have dropped everything except swipe. Most food places haven’t updated at all, only swipe, which is ridiculous! It’s not because people weren’t using it, there is some other reason for it. I think paying through an app has become what they all want, that way they can track your purchases and use or even sell that information. I am totally against this, you have to put your credit card information into each app to use it this way...and you have more and more servers where your credit card (and other information) is stored and more and more chances of it being hacked. ...Kroger won’t accept Apple Pay but working on another system like this. They aren’t listening to what we want, but trying to do what they want.

    Unfortunately, there is no way to force merchants to accept Apple Pay. Only thing we can do is keep telling these companies we shop where we can use Apple Pay first, because we prefer the security, privacy and ease of use.
    razorpitCarnageAirunJaechiaflyingdpStrangeDayspscooter63caladanianP-DogNCwatto_cobra
  • Reply 11 of 86
    benji888benji888 Posts: 133member
    ...also, you don’t necessarily have to pay with an app to get rewards.
    watto_cobra
  • Reply 12 of 86
    genovellegenovelle Posts: 1,117member
    benji888 said:
    ...also, you don’t necessarily have to pay with an app to get rewards.
    I like Walgreens implementation. Their card is integrated into Apple Pay 
    MetriacanthosaurusAirunJaemobirdStrangeDayslostkiwiwatto_cobra
  • Reply 13 of 86
    mobirdmobird Posts: 540member
    I know about all of Wal-Mart's bullshit to deny Pay but what is the reasoning that Home Depot uses?
    MetriacanthosaurusGeorgeBMacAirunJaewatto_cobra
  • Reply 14 of 86
    It’s not complicated. When I can’t use it at 90% of the places I swipe a credit card, it’s a problem. 

    There is nothing more to it than that. 

    chemengin1
  • Reply 15 of 86
    jungmarkjungmark Posts: 6,798member
    Not a huge user of ApplePay but I would have thought 9% adoption wasn't bad...
    According to pundits, only Apple must have at least 50% to be a marginal success. Anything less is doom for Apple. 
    cflcardsfan80watto_cobra
  • Reply 16 of 86
    payecopayeco Posts: 426member
    blastdoor said:
    Apple Watch plus Apple Pay is killer — nothing to pull out of a wallet, faster than a chip reader, and no need to sign. Once you use it, it’s all you want to use. 
    Can’t wait to upgrade from my Series 2 to a Series 5 in the fall. Double tapping the side button to bring up Apple Pay is dreadfully slow sometimes. If I’m at a place I know accepts it I’ll bring it up ahead of time while they’re ringing up my items. But if it’s a place where I’m unsure and I don’t know until I ask or I see that little contactless logo appear on the screen it can sometimes take 10 seconds or more for it it come up. With just one card in there it’s a little quicker but when I’ve got my 7 credit cards plus my wife’s 3 credit cards, plus loyalty cards for different stores, it is painful. The Series 5 should be much quicker.
    lostkiwiwatto_cobra
  • Reply 17 of 86
    payecopayeco Posts: 426member

    benji888 said:
    “In some cases, swiping or inserting a credit card into a point of sale terminal is easier than pulling out an iPhone, unlocking it and tapping it on an NFC reader.”

    Only someone who has never used it could write this statement! Total B.S, it is quite the opposite!! And, as already stated, only steps are:

    1) get your iPhone or Watch out and place near NFC reader
    2) use touch or Face ID and that’s it, easiest way to pay.
    (Actually, only one step, get your iPhone out, keep thumb on home button while putting it near NFC reader.)

    rob53 said:
    Stores are still shutting off Apple Pay capability even though their POS hardware handles it. Home Depot is a perfect example. Until all POS hardware is forced to accept Apple Pay stores will continue to turn it off.  Of course users need to understand what they have and use it. 
    This is the problem in the US!! I do recall being able to use Apple Pay at Home Depot, but, they, like others, have changed POS systems or payment services and they only accept chip or swipe cards now. Some places accept some NFC payments, but not Apple Pay. Some places have dropped everything except swipe. Most food places haven’t updated at all, only swipe, which is ridiculous! It’s not because people weren’t using it, there is some other reason for it. I think paying through an app has become what they all want, that way they can track your purchases and use or even sell that information. I am totally against this, you have to put your credit card information into each app to use it this way...and you have more and more servers where your credit card (and other information) is stored and more and more chances of it being hacked. ...Kroger won’t accept Apple Pay but working on another system like this. They aren’t listening to what we want, but trying to do what they want.

    Unfortunately, there is no way to force merchants to accept Apple Pay. Only thing we can do is keep telling these companies we shop where we can use Apple Pay first, because we prefer the security, privacy and ease of use.
    It’s not possible to disable Apple Pay but still allow other contactless payments. The payment terminal has no way of knowing you’re using Apple Pay because it is using industry standard contactless EMV to send your payment information. To the payment terminal it looks like you’re just holding up a physical contactless credit card.

    Speaking of contactless cards, all the banks are finally rolling out contactless cards. It’s only a matter of time before the payment networks mandate it. Visa and MasterCard already mandate contactless payment support anywhere their cards are accept in most other developed countries. Once that is mandated and contactless is enabled everywhere here in the US Apple Pay support will come along with it. 
    rundhvidgatorguychiacaladanianwatto_cobra
  • Reply 18 of 86
    I think once Apple gets a solid foothold in India, with real Apple Stores and Apple communities, Apple Pay will take off here. It will take a couple years to ramp up, but I'm looking forward to it being my main method of transaction. Apple just needs to get the major banks here onboard, which I think they can do.
    watto_cobra
  • Reply 19 of 86
    jungmark said:
    Not a huge user of ApplePay but I would have thought 9% adoption wasn't bad...
    According to pundits, only Apple must have at least 50% to be a marginal success. Anything less is doom for Apple. 
    But.... once having more than 50% of a market means that the Anti-trust people start to take notice don't they?

    Here in Europe we had contactless before Apple Pay so it was all there ready to go. However there is one big hold out here and that is a DIY Chain called B&Q. They want you to use cards to pay at automated tills but they don't have contactless support (According to the notice on the terminal). I make a point of NOT using those self service points and go through a manned till even if I might us a card. When asked why I make a point of telling them that until they take contactless then I won't be using their self service tills which really nag at you in a whiny voice "Please do this..." before you have had enough time to do it.
    They are my DIY store of last resort as a result.
    edited August 2019 watto_cobra
  • Reply 20 of 86
    EsquireCatsEsquireCats Posts: 1,134member
    "There is little incentive for consumers to ditch credit cards, the top form of payment in America, for a mobile payment alternative, du Toit notes. In some cases, swiping or inserting a credit card into a point of sale terminal is easier than pulling out an iPhone, unlocking it and tapping it on an NFC reader."

    WTF, does this guy have any clue on how Apple Pay works?  Apple pay is linked to a credit card.  You are not ditching anything.  Pulling a wallet then the card out of your pocket then sliding it into the reader is not easier than pulling out a phone and tapping it on the reader.  That's another joke.  And you don't have to unlock the phone, just double tap on a button. 

    So after reading that, why should I believe any of the stats that his company Bain offered up?  Does not even pass the sniff test.  Apple Pay has been out several years and it being accepted in more and more places.  Only 9%.  Who gave them those figures?  Why does Bain allow people like du Toit make ridiculous public statements like this in their name?

    Bain has used significant amounts of cherry picking when putting together this report.
    Firstly the USA is not a large % user of wireless payment technologies, but that is driven from two purchasing behaviours: Total penetration of physical credit cards in stores and the inability to use paywave when purchasing online.

    In terms of real facts: Support for wireless payments, wireless payment transactions and Apple Pay have all grown significantly since launch in the USA. In 2018 more than 50% of stores supported wireless payments, the majority of wireless payments in the USA are conducted with Apple Pay (over 90%).

    However Apple Pay is a payment platform, not just a wireless payment system. So far, over 10 billion transactions were conducted using Apple Pay in 2019 (worldwide). Additionally Apple's involvement in payments does not end with Apple Pay, the introduction of the Apple Card is a means to further penetrate and enhance Apple's involvement in payments and Apple Pay Cash is also another means of enhancing Apple's strategy to digital wallets.

    Also Bain speaks about China, which is a poor source for two reasons: It is a protected economy, so usage doesn't reflect sentiment and ApplePay is relatively recent in China.

    Finally, as you noted, Bain gets the function of Apple Pay wrong. It is indeed much easier than described, and Apple Watch owners can attest that it is the simplest form of payment; arguably this is the best implementation of any payment system to date.

    chiaNotsofastwatto_cobra
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