Why Americans aren’t using their phones to make payments in stores

“Americans who travel to China will find one thing somewhat unusual: In restaurants, stores and markets, people will take out their phones instead of credit cards when they’re ready to pay,” Krystal Hu reports for Yahoo Finance. “Despite all the buzz and excitement, mobile payment in stores still hasn’t gained much steam in the U.S. Mobile transactions barely accounted for $1 out of every $100 spent in-stores last year, according to a new report by 451 Research, a New York-based advisory company.”

“And analysts don’t expect mobile payment usage to rise anytime soon — the percentage is expected to reach just 3.4% by 2022,” Hu reports. “An eMarketer report highlights the gap between the U.S. and China: This year, 25.3% of smartphone users in the U.S. are expected to pay for physical purchases by phone, compared with an estimated 77.5% in China.”

“According to Gallup, a consumer in the U.S. has an average of 3.4 credit cards. Longtime credit card users don’t necessarily see the benefits of switching to mobile,” Hu reports. “According to eMarketer, the U.S. has about one-tenth of the mobile payment users in China, where major mobile payment providers offer benefits to encourage consumers who pay by phone. Chinese e-commerce giant Alibaba’s affiliate Alipay, for example, offers 10% off for Chinese tourists when they shop and use the app in Coach stores in New York City.”

Read more in the full article here.

MacDailyNews Take: Gee, ya don’t say? Incentivizing use is the key? Who’da thunk it?

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. — MacDailyNews, August 8, 2015

75 Comments

  1. It says something about current management that if MDN were running the company, Apple Pay would undisputedly be much farther along in adoption and you can bet your ass we’d have up-to-date Macs across the line. We’d also likely have slightly thicker iPhones – still plenty thin enough – with no camera bumps and batteries that last three days. We’d probably also have a usable Apple TV Remote and Siri wouldn’t be the one personal assistant stuck riding the short bus.

    Cook’s morning prep work each day should be reading yesterday’s MDN Takes.

    1. “Cook’s morning prep work each day should be reading yesterday’s MDN Takes.”

      I’ll second that. But don’t forget all the wonderful passionate comments from Apple users, particularly those loyal users since the 1980s, like myself.

      Regarding Apple Pay, I enabled it years ago and never used it. Guess this grizzled old fart finds it easier to pull out one of seven credit cards, insert the chip end, done. Not against Apple Pay, but not sure the convience is any different. If I got cash back, game changer …

      1. The added convenience of not reaching for your wallet is only marginal, but the security of Apple Pay over a credit card cannot be understated. Unfortunately, that’s invisible to users so they remain unaware.

        1. Security is better with the same credit card in Apple Pay over chip inserted in the checkout terminal at Walmart? Maybe you’re right, but that sounds marginal to me …

          1. Yes. Security with Apple Pay is better than with a chipped card. Even with a chipped card, your actual credit number is transmitted to the terminal for payment processing. With Apple Pay, your credit card number is never transmitted. Instead, a unique token is generated for each transaction. Even if an outsider were able to intercept and obtain the token, it would be worthless because they can only be used once.

        2. Yes. I use Apple Pay whenever I can, and it’s not like I am some tech nerd holding up the front of the line. I am retired, and using my phone or my watch is faster. At the grocery store, it’s actually significantly faster to use the phone, because I do not have to wait for the card insertion instruction; as soon as I have punched in my store loyalty number [wish that was a little easier to make a part of Wallet], I double click the side button, the hone scans my face and authorizes the transaction while goods are still being rung up, then the phone is already back in my pocket, and I am the one waiting on the terminal/cashier to do their part. The credit card can’t even come close to that and is less secure. But would more people do so if there was an incentive? You bet they would.

          1. I applaud your use of Apple Pay. However since both AP and chip transactions are completed usually while the items are still being rung up, I doubt it makes any difference in time for the people in line behind you. Chip CCs are just as secure since it also uses a transaction specific one-time generated token. I agree that more people would use mobile payments if there was an added incentive. Samsung Pay would probably be leading if it were available on more Android devices due to the system adding its own transaction incentives.

      2. One, ApplePay is faster than a chipped card.

        Two, the cards you associate with ApplePay already get points or cash, or whatever incentive those cards have.

        Three, you can leave your 7 cards behind, or just carry one as an emergency, or just leave that one in the car, like I do.

        Four, by going cardless and cashless, you can slim down your wallet and potentially avoid sciatica, since you’re old and carry lots of cards. I put a credit card, an ID, and a health insurance card, in a slot built into the case of my iPhone. I don’t need to carry no stinkin’ wallet. My iPhone and/or my AppleWatch can unlock my car, and remote start it to warm up or cool off. I don’t need to carry my car key. It’s liberating not to have to walk out of the house carrying a fat wallet, and keys, just my phone. Yes, my house doesn’t need a key, either. It has a Schlage keypad lock.

        1. “Four, by going cardless and cashless, you can slim down your wallet and potentially avoid sciatica, since you’re old and carry lots of cards.“

          Right, good advice. I always used a slim profile front pocket wallet to avoid sciatica. As I said in my previous response, many good points to consider and just might have to change my grizzled ways, thanks …

      3. Get an Applewatch… then you will notice the beauty of ApplePay. ( no incentives needed)

        Applewatch and ApplePay…. a Fantastic Dynamic Duo !

        And safer than any method of payment besides cash .

        1. Chipped cards provide the same purchase security since they also generate a unique token for each transaction. Stores will still not have anything on you assuming you don’t also use a loyalty card. In which case even Apple Pay wouldn’t be able to protect data on the particulars of your transaction.

      4. Well, this at-least-equally-grizzled old fart uses Apple Pay every chance I get – and sometimes when the merchant thinks there’s NO chance, because sometimes the terminals have Apple Pay capability and they don’t know it.

        Incentivizing use is one important method, but I think education is even more important. Apple could easily come up with a :15 and :30 to spread the message of how even chip cards (at least as used in the USA) are horrible, and don’t protect from skimmers installed to read the mag stripe while the card is in the “insert here” slot.

        C’mon, Apple – take advantage of the public paranoia about security, and push what Apple Pay can do for consumers and merchants. I’m tired of having to do it all by myself.

        1. “… and don’t protect from skimmers installed to read the mag stripe while the card is in the “insert here” slot.”

          I wasn’t aware there were strip readers that were designed for the chip slot. Do you have any articles you can cite for further information?

  2. No need for Apple to give users anything. You already have it – it’s called convenience. In the UK I’ve stopped carrying a card of any sort. All shops accept ApplePay and all store cards are also stored on the phone.

    1. Obviously, given the glacial pace of adoption, the need to incentivize Apple Pay is great. Incentivized in China, contactless payments are in high use. As if Apple doesn’t have enough money to properly incentivize Apple Pay’s use. All Apple lacks is the vision that MacDailyNews had three years ago.

      1. @Sarah – Exactly what financial incentives have been offered for people to adopt WeChatt or Alipay in China?

        When I last visited China, I was unaware of ever having seen any incentives to use smartphone payments, other then the sheer ubiquity and convenience of it. You see the QR codes absolutely everywhere, shops, taxis, bicycle hire, newspaper stands streetfood sellers and even street performers.

        As a westerner without a Chinese bank account, I wasn’t using WePay and had to resort to cash, which many traders were somewhat reluctant to accept as it was too slow and inconvenient.

      2. Glacial? Well first, Apple Pay was only released late in 2014 and there was large resistance from retailers because they were setting up their own CurrentC system (which never happened). Even today, WalMart, Target, Starbucks are all going in their own directions. So, it’s bound to slow things when large retailers remain resistant.

        Second, what does it matter? If you heard that China had a higher number of Chinese in their Apple Stores, would you say that we have GOT to increase the number of Chinese in American Apple Stores? So, the Chinese use phones more often when they pay for things, big whoop. As long as Apple Pay is making Apple money… and it is… it doesn’t matter if it’s 3.4% in 2022 or 1%. People will pay the way they want to pay and every Apple Pay transaction will make Apple a bit of money. That’s the only calculation that matters.

    2. I’m always puzzled by the argument that customers need financial incentives to try new payment technology. The fact that it’s more secure and very convenient ought to be enough to convince an intelligent person to try it.

      I too live in the UK and until recently I always paid cash for every small purchase and used credit or debit cards for larger purchases. Since Apple Pay became available here a year or two ago, I have pretty well stopped using cash. I’ve only made two modest ATM cash withdrawals since before Christmas and both of them were so that I had cash with me to tip waiting staff in restaurants.

      Apple Pay is useable virtually everywhere here and it’s very quick to use, much quicker than entering a PIN. The reason why I was reluctant to use credit cards previously for minor purchases was that it was hard to keep track of my expenditure unless I kept all those receipts. Apple Pay allows me to quickly check recent transactions on my iPhone. It would be even better if there was a way to automatically total those transactions each month or export them into Numbers.

      Recently I was out in the hot weather wearing my shorts and hadn’t bothered taking my wallet or any cash with me as I wasn’t expecting to need them. My wife phoned and asked if I could pick up some stuff at the shop while I was out, so I used the store loyalty card stored on my iPhone and then paid at the checkout using Apple Pay. I’ve previously done the same sort of thing at a hardware store when I didn’t have any money or cards with me.

  3. Hmm. I am American. I use my iPhone for purchases. I also buy movie tickets with Apple Pay. I guess the headline is wrong.
    Now, maybe the headline should be a complaint about NFC based purchase adoption rates.

  4. It’s not just about incentives, for developing countries, there’s less existing infrastructure slowing change. As the article notes, Americans have lots of credit cards that they’ve used for decades. Stores have lots of money invested in their older systems. Payment companies, Visa, Amex, MC, have lots of obvious reasons why they want you to continue to use cards.

    China had far less structural resistance to switching to mobile payments. Far fewer people had cards or multiple cards. They also had far less experience with them.

    I remember in 1993, seeing the first street ATM in Shanghai, on a major thoroughfare. I was sitting in a restaurant that looked out onto the street, and the whole time I was having dinner, I didn’t see a single person use the ATM. Of course, when I left the restaurant, I went to try the ATM to see if it actually was working!

    The same thing occurred with mobile phone adoption. Well into the 90s, landline phones were somewhat rare. You definitely could not assume that every home or apartment would have one. So, adoption of mobile was easy, since you skipped right over having to string phone lines to every house and apartment. Building out mobile infrastructure is far faster to reach every person than landline infrastructure.

    Similar infrastructural impediments in banking, checking, etc., make mobile payments more attractive in countries like China, than the US.

    1. “It’s not just about incentives, for developing countries, there’s less existing infrastructure slowing change.”

      The article focuses on Apple Pay adoption in the U.S., not sitting in a shop window in China watching ATMs.

      The AP infrastructure in the U.S. for the most part already exists, the adoption does not.

      And you’re wrong dissing incentives. Incentives are EVERYTHING …

        1. You want to talk “nonsensical” sitting in a China shop watching ATMs and going off on a unrelated tangent of cellphone adoption in the 1990s? Now that’s “nonsensical.”

          As I said the article is about Apple Pay adoption in the U.S. not the unrelated tangents in your post.

          Your opinion is incentives don’t matter, fine. My opinion is incentives are EVERYTHING, also fine.

          What’s the problem, snowflake? …

          1. If you read the actual article, the 5th word is “China”. They compare adoption rates in China vs the US, and being Chinese, I gave some context and perspective to why China is different to the US, in how new tech is adopted.

            “As I said the article is about”
            LOL, it’s all about you, isn’t it, but as I pointed out, the article mentions China in the 5th word.

            “Your opinion is incentives don’t matter”
            Sadly, I didn’t say that. I wrote, “not just about incentives”. I know English is my 2nd language, but what’s your excuse for not understanding?

            “What’s the problem, snowflake? …”
            Hmm…ad hominem attack, as we know, that means you already lost the argument. I played lacrosse for a 44x national champion, and I still coach it. I doubt you want to call me anything to my face. Of course, it’s the bravest ones who call you names on the internet.

            1. “I played lacrosse for a 44x national champion, and I still coach it. I doubt you want to call me anything to my face.”

              I was a wrestling champion in my younger days. Well, we will never know touchy snowflake …

          2. Actually the article is about ‘mobile wallet’ adoption. It just happens that Apple Pay was mentioned in passing as one example and later mentioned again when Starbucks is noted as being more popular than Apple Pay.

    2. I first visited Shanghai somewhere around the year 2000 and as Chinese Ruan were not available outside of China at that time, I decided to get them from an ATM when I got there. I put in my card, selected the British flag to chose the language and it welcomed me in English, but then every subsequent screen was in Chinese characters again. I couldn’t get it to display English, so tried pressing what I hoped was the button to withdraw money and was then shown a list of figures next to the row of buttons. I pressed the one next to an amount roughly equivalent to $100 and was greatly relived to get a thousand Ruan dispensed.

      That modest amount of money was all the cash I needed for a fortnight eating in restaurants for locals, drinking Chinese beer and snacking on street food and even for a haircut in a bizarre hairdressers in a narrow alleyway where the hairdresser carefully swept up my blonde hair and kept it separate from all the black hair sweepings- I wasn’t sure why and didn’t have the language skills to enquire.

      1. Nice story. Sounds like you didn’t try to get your yuan from the airport ATM, which is good, because it’s often empty, because that’s the first one foreigners see!

        As for the haircut, I don’t know why they would do that. Obviously, my hair is black, so they don’t separate out my hair. If it’s long, they might keep it to make a wig; but if it’s not, perhaps, they use it for traditional chinese medicine. Who knows?

        1. I never exchange currency at airports, the exchange rates are invariably poor.

          I have a credit card which offers near perfect exchange rates for foreign currency ( no transaction fees or hiked exchange rates ) and mostly use that for payments when I’m abroad. Cash is withdrawn via an ATM from my current account ( checking account ).

          As for the blonde hair, I wasn’t sure whether my hair was regarded as special in some way, or whether it would have diminished the black hair which was being collected. I wouldn’t have thought that there was enough blonde hair to make any difference either way and it certainly was not long enough for any sort of wig. It was only a trim and I was given a cup of green tea while waiting. The haircut with tea only cost the equivalent of about fifty cents. People rarely tip in China, apart from in places primarily catering for westerners.

          Wherever we went, we were always tremendously conspicuous, being regarded as tall ( I’m only 5’8″, but that’s pretty tall in China ), with fair hair and big noses. In restaurants we were invariably seated in the window and passers by would stop and watch the strangers eating. On subway trains or buses, young children would stare and point, but it was always in a curious, friendly way.

          1. Yep, airports know that you need currency, out of convenience, so they give you lousy rates. I mean, how else are you going to take a taxi into town?

            You’d think at some point foreigners would not be considered so unusual, particularly in the big cities, but still, you get the staring, and you still see Chinese kids wanting to take their picture with foreigners, mostly foreign kids, which I suppose aren’t as common as foreign adults.

    3. You’re right, people that want incentives are like liberals looking for a freebie handout. Either use it or not, I don’t care, but don’t beg for money for the “privilege”.

  5. I don’t use my phone, but I DO use my AppleWatch every time I find a place that takes Apple Pay…and if they don’t take it, I make it a point to immediately contact customer service to ask why not? So far, the only place that’s responded with “not interested” is Kroger….so I buy food elsewhere.

  6. Apple it seems is not bothered by the lack or muted use of Apple pay in America. Apple could easily offer discount (and therefore incentive) in its own stores to jump start the use of Apple pay. Maybe it is a cultural thing where Apple pay is unpopular

  7. It’s the POS systems, you have to look at how vendor habits require potential Apple Pay users to request to use NFC as they hide the terminal, or they wait for you tell them the payment method before they send it to the NFC terminal.
    Of course retailers that deliberately sabotage NFC payment approaches by actually preventing the NFC capable terminal are another problem. Such retailers view you as the product…

    1. So why is this happening in America and not in Canada or Europe? Why are American traders so reluctant to use NFC terminals and why do so many of them put obstacles in the way of using Apple Pay?

      It’s something which commonly happens in America and much less so elsewhere.

      1. Whatever the reason does not affect my purchases. I use chip credit cards and could not care less about the adoption rate of Apple Pay. No incentive for me to use it. Nuff said …

      2. It’s because they can mine and sell your data if you use your credit card. The Apple Pay transaction just slides the money from you to them, and that’s all they get. It’s anonymize so they can’t even build a payment history to see that “people who buy this also usually buy that later”. They don’t want to give up that control, so they drag their feet on it. Maybe they’re hoping they come out with the next best thing AFTER Apple Pay that still allows them to use your data.

        1. I think you’ve hit the nail on the head there. This obsession with always wanting to mine customer’s data is much more prevalent in America than elsewhere.

          To those of us less used to overwhelming advertising and eroded privacy, it’s hard to understand why any retailer would be reluctant to adopt a cheaper, faster payment system where the facilitator ( Apple ) accepts liability for fraudulent transactions. However when you take into account that retailers are denied personal data when using Apple Pay, it goes some way towards explaining why low adoption rates of Apple Pay is a peculiarly American issue while smartphone payment is now widespread elsewhere.

          It also explains why incentives to use payment systems are employed and regarded as normal. They’re taking your data and commercialising it, just like Google does. Apple respects the privacy of users and works in an entirely different way.

          My American friends often find it hard to believe how banking is so much cheaper in the U.K. than in America. I don’t pay any fees for banking or credit cards. My checking account is always free to use so long as it’s in credit and I never pay fees to use ATMs, even when I’m in America where locals pay withdrawal fees for using that same machine in their bank. Some of my credit cards pay me a small bonus for each transaction and there are no monthly fees for any of them. I no longer recieve unwanted advertising or promotional emails either because now they must by law be opt-in and always have a proper unsubscribe option.

          U.K. banks are not taking huge fees from the public nor hugely exploiting our data, but they’re highly efficient and still managing to make obscene profits. I imagine that American banks must be generating even greater profits from their customers. Why do American customers accept it?

          1. It is possible some consumers in the U.S. are not aware of (or perhaps they don’t have a good enough credit score) to receive a no annual fee credit card. I have never paid ATM fees at ATMs associated with my bank where I have a checking account, nor am I charged any fees for having one unless my balance drops below US$100. I have noted that depending on your bank/credit union, if you use a non-affiliated ATM they will reimburse any fees.

            The point is that there may certainly be banks in the US that are as you describe, they are more the exception IMO than the rule and it is unfortunate that some consumers are still using them.

      3. Wish I knew, but I suspect it’s the traditional frame of reference of retailers, therefore their employees. I recently paid my dentist with Apple Pay on the terminal hidden behind the counter, the person was surprised and quite pleased that it could be done. A week Iater another employee said it wasn’t possible and that they have to have the card in their hand to prevent fraud… Same place, same terminal, different person. Needless to say hiding the terminal behind the counter is a part of the siege mentality that afflicts to many points of sale…

  8. Reach for my wallet or reach for my phone.

    It’s easier and quicker to reach for my wallet, pull out the card I want to use and then put it away. One other thing, I often don’t remember how to use it (push what? open the app?, what else?) and I don’t want to hold up the line trying to figure it out. The last time I gave up and pulled out a credit card. GIVE US SOME CLEAR INSTRUCTIONS HOW TO USE IT. AND PLEASE DON’T FORCE ME TO WATCH A 5 MINUTE VIDEO THAT COMES WITH ANNOYING MUSIC.

    1. Have you ever actually used Apple Pay? It doesn’t sound like it.

      You don’t need to open any app or even unlock your iPhone. You simply hold the locked iPhone near the terminal and the terminal will open the Wallet app automatically and expect fingerprint authorisation. I takes literally one second and then you feel the iPhone vibrate to confirm the transaction.

      Depending on which particular digit you use for your fingerprint, holding the phone with your finger on the home button may seem a bit tricky, but remember that the fingerprint sensor recognises your finger irrespective of the orientation, so if you have stored the fingerprint for your left middle finger, it might be easier to hold the phone with the screen facing your palm and that finger over the home button. It’s a comfortable one hand grip and you don’t need to do anything else. I do it without even thinking about it and pause for a brief moment for the ding and the vibrate confirming success.

      As I keep my iPhone either in my shirt pocket or trouser pocket, I can get my iPhone much faster than I can get my wallet and I don’t need to find a particular card within my wallet.

      I was at the supermarket this morning and self-scanned my shopping as I walked around, putting the items in my own bag. There is seldom any queue at the self-scan checkouts, even when the shop is busy. Transferring the list of purchased items from the hand held scanner took ten or fifteen seconds then a couple of button presses to confirm that there was nothing I couldn’t scan, to confirm that the list was complete and that I was ready to pay. Apple Pay took just one second and printing the receipt about ten seconds. The entire checkout was done as it always is in about thirty seconds. I didn’t even need to tell the terminal how I proposed to pay. If it senses my iPhone, it takes payment by Apple Pay, if I pop in a card, it knows to use that card and if I put coins or notes in, it realises it’s a cash payment and gives change.

      1. Your Supermarket experience sounds wonderful. The next step would probably be something similar to Amazon’s ‘Amazon Go’ experiment where you scan your phone with the Amazon Go app on it at the door on entering and it charges you when you walk out with your purchase(s). No need for any POS terminal in any form.

        The downside of the system for privacy concerned users is that there really IS no privacy excepting the purchase transaction itself. All movement, things you pick up and put back and your final ‘basket’ are recorded.

    1. In the UK, the simple way is to look for the contactless pay symbol on the payment terminal. It looks like the “ripples” symbol which Apple uses for WiFi, but turned 90 degrees.

      If a terminal accepts contactless payments ( which virtually all do over here ), then it usually works with Apple Pay too – even if the sales assistant thinks it doesn’t.

    2. Apple needs to better market Apple Pay to retailers. You often see signage telling the customer what credit cards they accept but very rarely what forms of wireless payment. I got tired of asking clerks if Apple Pay is accepted and mostly getting blank looks or “No.” Shaw’s supermarket used to take Apple Pay but upgraded its card terminals for better chip reading performance and now Apple Pay doesn’t work. I do not think that retailers need financial incentives, just Apple help in promoting the advantages of paying with a smartphone.

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