- Adoption of Apple Pay is greatly underperforming expectations, according to a report in The Wall Street Journal. Loup Ventures partner Gene Munster told the publication he previously predicted Apple Pay would handle $207 billion in transactions last year versus the comparatively modest $36 billion it actually handled. Loup Ventures figures 13% of an estimated 680 million iPhone users have activated Apple Pay. Sanford C. Bernstein pegged Apple Pay’s 2016 revenue at $30 million, not even a blip on Apple’s income statement.
- Many consumers are hesitant to get on board with Apple Pay and its mobile wallet competitors. A survey by the research provider Creative Strategies cited by the Journal revealed 40% of American consumers worry about security risks and over 60% are completely unfamiliar with mobile payment services.
- Apple Pay’s retail penetration is also weak. About one-third of stores accept it, per Nilson Report, and big retailers such as Wal-Mart and Kroger haven’t enacted any sort of program for Apple Pay. Still, Jennifer Bailey, vice president of Apple Pay, emphasized in the Journal article that more than half of the 100 biggest merchants in the country, including Starbucks, Best Buy and Kohl’s, have signed on to Apple Pay. Apple CEO Tim Cook has said the number of Apple Pay users tripled over the past year and transaction volume jumped at least sixfold.
Apple Pay’s mobile payments revolution hype clearly hasn’t matched reality. The Wall Street Journal suggested that Apple anticipated consumers would welcome the mobile payment option as enthusiastically as they did iTunes. No dice. Research from both Loup Ventures and PYMNTS has shown mobile payment adoption in the U.S. is paltry, and PYMNTS suggested it has stalled altogether.
Apple Pay is ultimately butting up against an entrenched system of payment processes that consumers and retailers are reluctant to abandon. Retailers face training and technical constraints when attempting to switch to digital payment protocols, and a few seem to be maneuvering to attract customers to their own branded mobile wallets rather than move them to Apple Pay, Samsung Pay or Android Pay.
A lot of consumers, on the other hand, are perfectly happy with how they currently pony up for goods — with cash and cards, a process that was never overly complicated to begin with.
Despite the lack of traction, no one appears to be giving up on mobile payments yet. In fact, industry observers who supplied the Journal with the dismal statistics on the state of Apple Pay were upbeat about its future. Nilson Report publisher David Robertson envisions Apple Pay will be embraced broadly by consumers and retailers, telling the Journal that it’s going to “become so ubiquitous that we will all do it.”
More marketing could help nudge Apple Pay in that direction. Two commercials plugging Apple Pay aired in 2015, but there’s been little promotional activity since. With an ad budget likely topping $1.8 billion, Apple could afford to throw some marketing dollars Apple Pay’s way.
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