Has The Mobile Payments Noise Calmed?

A month after Apple Pay launched, MasterCard CEO Ajay Banga was quick to remind analysts in the company’s third-quarter earnings call that Apple Pay wasn’t the only player innovating the mobile payments space. Now, six months after Apple Pay’s launch in an recent interview, Banga offered some additional context about the state of mobile payments in general, which includes much more than just Apple Pay.

“Apple is a great brand and so the whole world was talking about Apple Pay for a little while. But the noise has calmed down, and so [it] will for Samsung Pay and Google, and all the banks are launching their own version, then there’s our MasterPass and Visa Checkout,” he said. “All of this is because of the fact that this physical/digital world is converging.”

Banga pointed out that many mobile payment apps haven’t carved out a valuable enough product to get people motivated to use them. Convincing consumers to ditch their cards and convert to mobile means delivering a payments experience they can’t get elsewhere to motivate the switch — which Banga said means more than just connecting mobile with the act of payments.

“If you add value, people will do it. But if all you are doing is saying ‘instead of reaching in your pocket and taking out your card, well, now you are going to take out your phone and wave it’ – I don’t know what you are solving,” he said.

While technology changes quickly, consumer habits move at a slow pace, Banga said, and it takes a lot to create a mindset shift. Consumers may not also be ready to switch over to mobile as their sole payment option simply because the trust isn’t there to rely on a device as a financial lifeline. And Banga’s comments are backed by stats that suggest that consumers are still waiting to catch the mobile payments bug.

“These things are slow burns,” Banga said during the company’s fourth quarter earnings call, referring to the broader topic of mobile payment innovations. “You saw Apple Pay talk about their mobile payment growth, and at the end of the day, yes, they’ve done a great job and it’s excited the market, but it’s still a very small percentage of what the total number of transactions are.”

MasterCard is obviously a strong supporter of Apple Pay but has also touted its own digital wallet services (MasterPass), which Banga says supplements the mobile payments apps in the market by providing value beyond being just a digital wallet.

Apple Pay adoption is progressing, but it still has a long way to go — as recently released data from the InfoScout and PYMNTS survey of iPhone 6 users indicated. Eighty-five (85) percent of iPhone 6 users haven’t even tried to use Apple Pay. Only 9 percent had even tried it, and just 6 percent revealed they were users of the service. The biggest reason – those who tried Apple Pay in the past who didn’t convert to users likely just forgot to use it again. In fact, 32 percent of respondents said they simply forgot to use Apple Pay again.

“Muscle memory is a challenge,” InfoScout Co-Founder and CEO Jared Schrieber told an audience at Innovation Project last week (March 19). He said one of Apple’s biggest challenges is the fact that some iPhone users don’t understand how or even why they would use Apple Pay. “If I’m Apple, I’m dead-focused on point of sale and making sure there is a trigger to make sure I pull out my phone and not my card.”

Regardless, there’s still some encouraging signs for Apple.

“Six months after release, this incredibly informative data shows some encouraging things for Apple—usage is getting better and those who use it love it so much they would make merchant choices based on whether they accept it,” said MPD CEO Karen Webster, referring to the InfoScout report. “But Apple still appears to be struggling to get beyond a small percent of early adopters.”

To some Apple critic’s points, getting consumers to change means giving a reason to stop what they are doing today and to start something new. More than one-third of the people surveyed said that they didn’t try Apple Pay because they didn’t have a reason to change from their current payment method, and one-fifth said that they preferred an alternative method of payment.

But from the 6 percent identified as regular users by the latest InfoScout/PYMNTS Apple Pay Adoption survey — the perception of the product was strongly positive. When the Apple Pay experience was stacked up against the swipe experience, 73 percent of users said Apple Pay was easier to use, 77 percent said it was faster, 70 percent said it was more secure and 79 percent said it was more convenient.

Apple Pay, in payments years, is an infant – just about 6 months old. It’s barely crawling – and is making everyone else run – fast and hard in the direction of making mobile payments a reality.

As an industry, we’ve been talking about mobile payments now for a very long time – a decade at least. When Apple Pay launched, it also introduced a mobile payments roadmap – a roadmap that some will choose to follow and others may choose to ignore as they build their own. Regardless of whether Apple Pay becomes the way we pay in store, in app and online, they’ve given the industry the jolt it needed to get serious about mobile payments and think strategically about how to make it happen, for consumers, for merchants and for the payments ecosystem more broadly.

Hype notwithstanding.