Apple Pay promised to make plastic obsolete, but wary shoppers and confused clerks hinder adoption

“Nancy Schrum watched curiously as a colleague from her law firm waved an iPhone above a credit-card reader to buy a Subway sandwich with Apple Pay earlier this year,” Tripp Mickle reports for Dow Jones Newswires. “‘I have that, but I’m afraid to use it,’ said Ms. Schrum, who feared the technology wouldn’t work.”

“When Apple Inc. launched its mobile-payment service more than two years ago, it hoped to speed up the checkout process and, ultimately, to replace physical wallets for U.S. consumers,” Mickle reports. “Apple Pay has made significant headway, but Ms. Schrum’s wariness reflects a range of factors that analysts say have caused growth to undershoot their expectations, including security concerns about the service, retailers that don’t accept it, and Apple’s relatively paltry marketing.”

“The pace of Apple Pay adoption has been ‘disappointing even to conservative expectations,’ said Gene Munster, managing partner at Loup Ventures, a venture-capital firm specializing in tech research,” Mickle reports. “Just 13% of the estimated 680 million iPhone users have used Apple Pay, according to the research firm.”

“Eddy Cue, Apple senior vice president in charge of internet software and services, said the service has been adopted faster than other payment systems and he believes it will eventually replace cash, debit and credit cards as the primary payment system,” Mickle reports. “‘Does it matter if we get there in two years, three years [or] five years?’ Mr. Cue said in an interview. ‘Ultimately, no.'”

Read more in the full article here.

Eddy Cue
Eddy Cue
MacDailyNews Take: Eddy Cue. Always driving hard.

Just the type of A+ player Steve loved. Steve would be so proud.

And give Apple a break. How’s a company sitting on only $250 billion supposed to be able to properly market a new service?

As we’ve written many times, as recently as February: “There is no better way to pay than with Apple Watch and Apple Pay. Two simple things could turbocharge Apple Pay usage: Better (or actual) signage at the point of sale and incentives for using Apple Pay. Imagine Apple Pay usage if Apple simply offered $1 to spend at the Apple Store for every hundred spent via Apple Pay.”

But, of course, signs cost money and simple incentives require upper level executives to have a smidgen of imagination and foresight.

As we wrote last August, imagine at the special media event to introduce the next-gen iPhone, Apple CEO Tim Cook said something like this:

And, of course, the new iPhone works with Apple Pay and, starting today, for every $100 you spend using Apple Pay, you get $1 off at Apple retail and online stores. So, spend $100 on groceries using Apple Pay, you get $1. Spend $300 on a plane ticket using the Delta app, you get $3. Use Apple Pay in your ExxonMobil Speedpass+ app to buy your gas. It all adds up! By the end of the year, you’ll likely have quite a discount on your next iPad, Mac, or iPhone!

Would you use Apple Pay more if Tim Cook said something like that? We know we certainly would. So would tens of millions more people than are using Apple Pay today.

As we wrote nearly two years ago in August 2015:

Apple, give us a reason to use Apple Pay beyond looking like tech dorks in front of the line at the register. What’s the incentive to use Apple Pay? There is none besides looking like a flaming nerd. As if Apple doesn’t have any money. That, inexplicably, is how they approach Apple Pay. Hello, Tim? Eddy? Talk to some people who actually go to stores and shop for things, please.

Incentivize its use! Give Apple Pay users a percentage of every dollar spent via Apple Pay to spend at Apple Stores. Something. Anything! Get people used to using it first. Sheesh. It’s really not that difficult. It really isn’t.

Retail survey: Apple Pay now being accepted at more retailers than any other mobile payments service – February 22, 2017
Apple Pay transactions are growing at a rapid rate – November 30, 2016
Apple Pay messaging at point-of-sale drives 135% increase in mobile payments usage – November 21, 2016
Apple Pay at two years: Not much to celebrate – yet – October 20, 2016
What’s wrong with Apple Pay? – August 5, 2016
Apple Pay’s frequency of usage is putrid – August 3, 2016
Apple Pay and wannabes must offer perks to grow – December 14, 2015
Starbucks, KFC, and Chili’s to accept Apple Pay this year – October 8, 2015
Barclays to bring Apple Pay to the UK in early 2016 – October 7, 2015
Some Best Buy stores are now accepting Apple Pay – September 18, 2015
MCX CEO gone a day after Apple Pay lands Best Buy – April 28, 2015
Best Buy capitulates, to accept Apple Pay despite CurrentC allegiance – April 27, 2015
Major retailers see Apple Pay wave – November 17, 2014
In only 3 weeks, Apple Pay is changing how consumers pay – November 17, 2014
Boycott CVS and Rite Aid – October 27, 2014
Bad business: CVS and Rite Aid antagonize their most well-heeled customers by blocking Apple Pay – October 27, 2014
CVS stores reportedly disabling NFC to shut down Apple Pay – October 25, 2014
iPhone users earn significantly more than those who settle for Android phones – October 8, 2014
Yet more proof that Android is for poor people – June 27, 2014
More proof that Android is for poor people – May 13, 2014
Apple’s iOS dominates in richer countries, Android in poorer regions – March 25, 2014
Twitter heat map shows iPhone use by the affluent, Android by the poor – June 20, 2013


    1. Great point. Introducing a disruptive alternative to an established workflow is always a marketing-intensive, expensive proposition, and Apple hasn’t really tried. I mean, to be fair, without any significant marketing, they garnered $20B of purchase activity, but in the grand scheme of Apple’s budget and the TAM (total addressable market) of all Point of Sale purchases, it’s a piddly sum. Just imagine though what they could do with a little effort, on the scale of the marketing push with the launch of the App Store! Remember that? Full page ads in every local, national, and international newspaper, every major magazine, basically everywhere you looked.

      But the other challenge is that it’s still easier to pull out a credit card and purchase than to try to tap your watch or phone, notice that it failed, try again, and then sigh and pull out your credit card and purchase.

  1. Been using ApplePay since release in USA. I still find people who are not familiar with the concept and have to explain it to them. However, there are also a greater number of store clerks that have now seen it and LOVE IT when compared to the “chip-card” BS that really slows down the checkout lines…!!!
    I wish it was growing faster but time will tell……

  2. I use Apple Pay as my preferred payment option here in the UK, but the biggest drawback is that the banks will only allow it to be used for purchases up to £30, which often doesn’t even cover a modest supermarket ‘top-up’ shopping trip nor will it let me fill my petrol tank. That’s the two most frequent transactions for me and the banks have made both impossible via Apple Pay.

    I always used to use cash as I found that with credit cards, it was difficult to keep track of what I’d spent. There was no simple place for me to keep all the receipts as I only have a wallet and almost never wear a jacket, so receipts tended to get mislaid. With Apple Pay, I can see a listing on my iPhone showing exactly what I’ve been spending.

    It would be great if Apple could introduce a feature where I can draw a line at a desired point under my recent transactions and it would add up all the payments above that line so that I can check what I’ve been spending.

    The system has been totally reliable for me, without a single failed transaction. I once helped a neighbour who couldn’t make Apple Pay work and noticed that he pressed the home button hard to authorise the transaction, which of course took him back to the home screen. Once I pointed out that you only need to lightly touch the home button to register your fingerprint, it’s been working perfectly for him ever since.

    1. I expect that limitation to change. The banks are already talking about raising the ‘contactless’ limit to £50 since they have detected no discernible increase in fraud claims, which will be followed by a similar limit for ApplePay.

      1. I can see how a cost limit is appropriate for contactless payments because the only identity verification is possession of the card and the user could have stolen the card, however with Apple Pay, the transaction is verified every time, so the opportunities for fraud are minimised and therefore there should be no need to have such a low limit.

      2. “With Apple Pay, I can see a listing on my iPhone showing exactly what I’ve been spending”

        Somehow, that small detail has been omitted in every single review of ApplePay I’ve read. Having all my receipts on one monthly statement is precisely why I use one, and only one, charge card for everything. Up to now I had thought I would lose that feature to move to ApplePay, so thanks for pointing it out.

        The only remaining snag is all those annoying “loyalty” (info-mining) cards that I am forced to use to get sane prices. They force me to take out my wallet anyway, so why not just use the actual card while it’s out.

        1. Just to clarify things, it’s not one monthly statement on Apple Pay, your iPhone lists all recent transactions right up to the last millisecond and it has a list for each of your cards which have been authorised for Apple Pay.

          For my purposes it’s absolutely ideal as I can use either my credit card or my debit card with a different bank and I only need to glance at my iPhone to see what I’ve been spending recently. As more of my cards get renewed and offer contactless payment, I’m getting more of my cards set up for Apple Pay.

          For anybody who doesn’t know about it, in Apple Pay, click on the particular card, press the “i” button and look at the transactions, which are listed with the most recent ones at the top.

          It’s amazing how often people review apps rather superficially and completely fail to mention really useful features.

  3. Cashiers are among the lowest of intelligence out there. What would you expect? These aren’t tech-savvy people or they would have tech jobs instead of something that should have been automated by AI and machines a long time ago.

    1. And that excuses Apple’s lack of marketing, signage, and incentives, how, exactly?

      If Apple properly educated and incentivised the public, the cashiers wouldn’t be an impediment. Customers would demand it and stores would make sure it worked and the help knew what it was and could execute transactions.

      Sometimes I think the MacDailyNews Take writers could run Apple better than Cook, Cue, and Schiller. At least MDN would have signs and incentives for Appel Pay and we’d have a kickass, expandable Mac Pro right now, today – and it would’ve been updated regularly for the last four years, too!

  4. Yes, I am going to say how Apple should spend some of it’s money and no one likes that.

    But you have $700 Billion cash, spend a little bit of it educating businesses, small businesses, mom and pop businesses on what Apple Pay is. Send every company in America door stickers and point of sale stickers to let people know Apple Pay is accepted at this store. Educate businesses why Apple Pay is more secure and quicker which leads to more profit for them. Run some TV ads about Apple Pay.

  5. Small banks and credit unions moving slow to adopt Apple Pay. My credit union is planning on it but have not rolled it out yet. So there is four people in my family that can’t use it yet but would be enthusiastic users when available.

  6. Offering 1.00% back on Apple Pay transactions would be stupid because Apple only makes 0.15% on the transaction. Apple quite rightly would not pay people to use it.

  7. You know, the system is still so F’D up. One place accepts Apple pay, another accepts chip, another accepts chip on for credit, but swipe for debit, and on, and on. It is just one massive clusterf**k.

    1. That may be true in your country. Other countries have universal acceptance of chip and PIN cards with contactles being increasingly available as well. If contactless is available, Apple Pay should also be available too, but in some places that isn’t how it works out.

      Banking and payment technology is considerably more advanced in Canada and Europe than it is in much of America.

        1. It reminds me of how music labels resisted iTunes initially, but eventually decided that it was in their interests to get on board with Apple. I don’t think that major banks or retailers will hold out indefinitely.

  8. Here in Singapore, I am currently getting a $2 discount with every ApplePay purchase at Stsrbucks for the month of April. This is promoted by a local bank, and they already had this promotion sometime last year. His means I get my usual coffe at a 50% discount. Use ApplePay for almost 90% of my non-cash reactions as readers widely available

  9. The problem is, at least here in the US, is that popular retailers like Walmart, Holiday, and other places, either don’t have their systems set up for Apple Pay, or they completely refuse to use it in place of their own similar service.

    Because of this, new NFC systems like Apple Pay and Android Pay are being unnecessarily hindered. Skepticism comes out of nowhere, people think their bank card numbers are being harvested, other paranoia, it’s just a mess. The Apple Pay system is actually far more secure than a credit card, but I’m constantly having to have both my credit card on me as well as my iPhone because some places just don’t accept Apple Pay.

    Places I shop at that use Apple Pay:

    Kwik Trip
    Micro Center
    Casey’s General Store

    Surprisingly, Walmart, CVS Pharmacy, Holiday, and Target don’t take Apple Pay. It’s really confusing. They have the equipment for it, but won’t use Apple Pay.

    I think the other major problem is the big cheeses who don’t wish to share technology because of greed.

    VeriFone terminals 9 times out of 10 do accept Apple Pay and Android Pay. (Oddly enough, Holiday stations use these very terminals, but their systems aren’t set up for Apple Pay.)

    I’m coming from Minnesota. I’m not sure about the rest of the US, but this has been my experience.

    1. I’m in New York. Almost everyone accepts it, except for the ones you had already mentioned (CVS, Home Depot, Traget).

      I still occasionally come across a shop where cashiers don’t even realise they take Apple Pay. By now, I can confidently tell when a terminal is NFC-enabled and those usually accept ApplePay. I would then pull out my phone, and the person on the other side would say “Oh, we aren’t equipped for phone payment!”. The terminal would then beep, my phone would acknowledge the payment, and the reaction would almost always be “Whaddayaknow!” In many cases, it is the business owner who is surprised that they can actually accept ApplePay.

      Apparently, whoever is their merchant account service provider is clearly not telling them that the PoS terminal they got actually works with contactless mobile payments.

      What surprises me is the percentage of business, small and large, that still only take magstripe swipes (not even chip!). I wonder if they are even aware of the liability they are accepting by doing this.

      1. If sales of the upcoming Galaxy S8 series do well there may be a nice influx of Samsung Pay users. That system will allow you to pay via NFC or Card reader via special magnetic chip. As far as the POS terminal is concerned it thinks a card got swiped. Great for more exposure of electronic wallet use.

        1. I am seriously doubtful that the special magnetic chip will ever get any meaningful traction. The only reason people would bother to adopt contactless mobile payments is if it is easier, simpler and faster to use. If I understand this correctly, this chip has been built into Samsung Galaxy phones since S6 (two years ago). There seems to be virtually no user adoption of this technology.

          In general, when we look at adoption rates among owners of compatible devices, Apple Pay has stronger adoption rate than Android (or specifically Samsung; there is AndroidPay and Samsung Pay!!?). Couple that with a lot lower market share of those Samsung phones, compared to the iPhone (and especially the more expensive models that support mobile payments), and the conclusion is that the influx of Samsung Pay users into the mobile payment market space will be rather negligible.

          This market segment is Apple’s for the taking, if they can only figure out how to convince people like my brother (or his wife) to bother giving it a shot. This is the biggest challenge — getting people interested.

          1. I think Samsung Pay has just as many (or more) problems as Apple Pay catching on due to lack of good marketing. Samsung Pay is also at somewhat of a disadvantage in numbers of units that have the magnetic chip w/o which it is more like other Android based wallets. The two advantages it does have however over other systems including Apple Pay is the magnetic chip that allows use of POS terminals not equipped with NFC readers to still be used for payment and a usage incentive plan. This is my reason for stating that if sales of the Galaxy S8 series does well it improves the numbers of capable devices that make full use of Samsung Pay.

            That is exactly my point, Samsung Pay is at a disadvantage due to the number of units that make full use of Samsung Pay’s capabilities. My point was that with the possibility of a good influx of Samsung Pay users there would be more exposure of electronic wallets in general to the public. This is good for Apple Pay also since it seems to also be very slow in being adopted despite the practically 100% capable units out there for the past couple models.

            It is still a battle but Apple probably has the best chance right now and from what I observe, squandering the chance. I agree with you about getting people interested in using electronic wallets over magnetic stripe or chip is key.

    1. Do you find other apps opening when you don’t want them to, or is it something that’s only happening for you with Apple Pay?

      When I’ve seen people having problems with Apple Pay staying open, it’s because they were pressing the home button ( and of course going back to the Home screen ), rather than simply resting their finger on it to allow their fingerprint to be read.

  10. Apple doesn’t need to give store credit to get most people to use Apple Pay. They just need to pressure the big retailers to turn it on. Several of them, such as CVS, Home Depot, etc accepted Apple Pay for a short time, then stopped letting customers use it. I use Apple Pay at EVERY store which accepts it, and incentives such as the ones MDN keeps preaching about would not increase my Apple Pay spending a single cent.

    Apple needs to conduct a huge ‘shame’ campaign to force these companies to give customers all available options for paying.

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