Apple Pay a Bust on Black Friday, New Data Shows

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8:35 AM EDT December 1st, 2014

More than 95 percent of iPhone 6 and 6+ users who could have paid with Apple Pay on Black Friday didn’t according to a survey of more than 400 users conducted by InfoScout. Five weeks after the launch of Apple’s revolutionary payment method more than 90 percent of these users hadn’t even given it a try.

Perhaps even more surprising is that five weeks after the launch of Apple’s revolutionary payment method, more than 90 percent of those who could have used Apple Pay, because it was sitting there right on their phones, hadn’t even given it a try.

InfoScout has a panel of more than 140,000 smartphone users who participate in its surveys. These users scan receipts in return for participation in various incentive schemes. They also respond to surveys from their phones.

On Black Friday, InfoScout identified 408 panelists that had the iPhone 6 or the iPhone 6+ and who bought at a store that accepted Apple Pay on Black Friday, November 28, 2014. All of these panel participants therefore had Apple Pay and could have used it to pay for their purchases.

Let’s repeat this just to be clear.

All of these people had a phone in their hands that had Apple Pay functionality and were standing at a register that had NFC.

And they didn’t.

 

Here’s what the data shows.

apple-pay-black-friday-1 Source: InfoScout, November 2014
Only 4.6 percent of those who had phones that could enable Apple Pay who could have used it to pay did so. InfoScout asked the 95.4 percent of those who didn’t pay with Apple Pay why not. Almost a third—31 percent—didn’t know the store accepted this new method of payment. They apparently didn’t make the connection between the store having an NFC terminal with the wave symbol and being able to pay with Apple Pay. Another 25 percent forgot to use it and 19 percent didn’t have their phones handy.

More than a month after the launch of Apple Pay most iPhone users with the new payment method haven’t even tried it. In response to questions from InfoScout, 90.9 percent of iPhone 6/6+ users reported they hadn’t tried it. Of those about 32 percent said it wasn’t clear to them now it worked, 30 percent didn’t see a need for it and 19 percent were concerned about security. Only 9.1 percent of those who have Apple’s new payment method available on their phones have given it a try.

 

Thinking back to the very first time you used Apple Pay, which of the following best describe your experience?

 

apple-pay-black-friday-2

Source: InfoScout, November 2014

There was good news for Apple. Those who have tried Apple Pay say they love it. According to InfoScout, more than half of those who have tried Apple Pay say it is “amazing” and “easy to use” (52.6 percent in both cases). Only 3.5 percent found that it didn’t work and even fewer, 1.8 percent, said it was difficult to use. Not surprisingly, then, of those who have tried it, 42.1 percent say they use it “every chance I get”, and another 35.1 percent whenever they can remember.

Also important is the number of cards that consumers with Apple Pay have registered with the digital payment method. Overwhelmingly, that is one, with 56.1 percent of Apple Pay users saying that they have only one card registered to their Apple Pay account. Top of wallet has always been front and center and with Apple Pay, it is now even more so.

 

How often do you use Apple Pay?

 

apple-pay-black-friday-3

Source: InfoScout, November 2014

InfoScout recommends that Apple needs “to find a way to capture mindshare at checkout, and to remind or inform the user that the purchase could be made with Apple Pay.” One way to do that is to have a prominent display at checkout.

Or perhaps make the experience more than simply about payments. Vantiv’s Daniela Mielke said recently in an interview with MPD CEO Karen Webster that creating habituation can actually be about more than loyalty. Convenience can be a huge driver of that, but until consumers actually make the connection that they can use Apple Pay in enough of the stores that matter to them, ignition could be slow.

We have to admit that we were pretty surprised by these findings. Perhaps the starkest implication here is that 4.6 percent of the eligible set of consumers – those with iPhones 6/6+ – which is already a small subset of consumers – have used Apple Pay when they were in a store that accepted NFC and where they could use it. Not 4.5 percent of random consumers, or even iPhone 6 users, in any store. This is the absolute perfect and primo set of people for which Apple Pay is intended – iPhone 6/6+ with Apple Pay and in a store that accepts it.

 

How many cards to do you have registered with Apple Pay?

 

apple-pay-black-friday-4

Source: InfoScout, November 2014

Further, only one out of every 10 people who could use it, have even tried in the last five weeks. And again, these are the early adopter people who wanted the iPhone 6 and bought it first. Apple Pay wasn’t obviously the big driver, in spite of how much air time it took at the launch of the iPhone 6/6+ on September 9th. Tim Cook’s video of the existing payments experience must not have been all that convincing.

We wanted to get the reactions from a few people in the payments community. Here’s what they had to say:


 

Carol Alexander | Head of Product Marketing, Payment Security | CA Technologies

4.6 percent is a good turnout considering Apple Pay is in its infancy. With very little public awareness and encouragement, it is great to see the pickup and to note also for those that used it, it was a great success. Once the merchants see the benefit and begin to promote the use of Apple Pay, I’d expect the number of people using Apple Pay to grow exponentially. It’s also not surprising that Apple Pay Users have one card registered. It makes it easier to track your spending by using one card for all Apple Pay purchases. Again, as awareness grows, and more card brands allow mobile payments using Apple Pay, I’d expect to see people register additional cards.


 

Justin Benson | CEO | Spreedly

Based solely on this data, it doesn’t appear people are buying iPhone 6’s to use with Apple Pay. If Apple Pay is a weapon in the war against Android then it’s not a successful one (yet). It’s wonderful that those who use it like it so much. But at less than 5 percent of total possible users it shouldn’t surprise us. That’s really your early adopters/evangelizers who are always super passionate. It would be interesting to see “non Black Friday” usage data. I wonder if the additional stress of Black Friday means people fall back to a payment method they’re most comfortable with. Would they be more inclined to experiment with Apple Pay if the store was quiet and less stressful?


 

Kate Bolseth | CEO | Jingit

While only a relative handful of shoppers used Apple Pay on Black Friday, we have to keep in mind that it’s still early days for Apple Pay and mobile payments in general. Clearly, based on the survey responses, it’s an issue of getting used to using mobile payments – 75 percent of the respondents forgot about and weren’t prepared to use mobile payments or didn’t make the connection between NFC terminals and Apple Pay. Mobile payments seem novel this holiday season, but that will change rapidly as new incentives to adopt mobile payments start entering the ecosystem. When consumers are able to perceive more value to adopt, usage will accelerate. Apple Pay is one of those change agents that will make mobile payments a relevant, accepted standard for retailers, brands and consumers.


 

Alisdair Faulkner | Chief Product Officer | ThreatMetrix

The moment of truth comes down to the point-of-sale (POS) device. The challenge is that for contactless payments you have terminals branded with PayPass (MasterCard) and/or PayWave (Visa) and now Apple Pay. It has not been made clear to customers what can be used where. Is it a specific Apple Pay branded POS device, or any device that accepts contactless payments, or something else?


 

Will Graylin | CEO and Founder | LoopPay

Most people don’t see Apple Pay as a replacement for their wallets. Even those who use it, 56.1% loaded only one card, not all their cards like you would your wallet. (30% didn’t see a need, 32% didn’t know how it works, so the benefits of replacing their wallet with their phone is not there.)

It is easy and cool to use Apple Pay (I’ve used it several times, works great), but only in a few places you can use it. 4.6% of Apple Pay users used it on Black Friday, which is close to 3% of places that accept Apple Pay. Not surprising. I did not use my Apple Pay on Black Friday because the places I went to, including Best Buy, did not accept it.

Net-net, if you want to change consumer behavior (starting with the 9.1% of lead users who signed up for Apple Pay already), you need to have more places that accept Apple Pay! Otherwise, most will simply go about their own normal habits, and you’ll end up with 4.6% usage.


 

Manny Ju | Director of Strategic Partnerships | @Pay

This study shows the divide that exists between technology and the adoption of that technology. Apple has always been about ease of use and has cultivated an extremely loyal fan base as a result. I attribute the low Black Friday adoption rate to the failure of Apple’s legendary marketing machine to educate the public in advance of that date. I don’t recall ever seeing any prime-time commercial educating — much less promoting — the adoption of Apple Pay.


 

Edward Kozmor | VP Communications | Chase Card & Merchant Services

We are excited to be a leader in the launch of Apple Pay and pleased with the reaction from Chase customers. As you know, we support innovation for the long-term benefit of our customers. We are hearing great things from our customers who have tried Apple Pay and fully expect the usage numbers to grow over time.


 

Katherine McClure | Associate Director of Innovation | TSYS

These numbers don’t surprise me, and I find them encouraging considering the short time Apple Pay has been available. Anytime something very new comes out that changes us out of long-standing habits, it takes a while for it to become the norm. In the hustle and bustle of an intense shopping day like Black Friday many shoppers are running on auto-pilot and strong coffee which simply doesn’t encourage trying a new payment form. I can see people giving it a first shot on a slower day without a long line behind them, learning how easy it is to use, then remembering it on other busy occasions.

There is also the issue of education with account holders; in the conversations I’ve had with non-payments professionals (and a few payments professionals!) Apple Pay seems like a curiosity that has not been well explained to new users. Few merchants are actively promoting Apple Pay, and for them it doesn’t seem to make a lot of sense to since it is really just another credit card payment to them, and there is not a lot of easily accessible information for those not obsessed with payments or their new devices. Issuers and Apple could help consumer adoption by taking a more thoughtful approach to education beyond a quick blurb or video. In my experience, I’ve mainly been explaining how using Apple Pay is actually safer than a plastic card due to tokenization. It takes a while for that to sink in with a lot of people, not because they lack the ability to understand it, but because it’s a very different concept than they are used to. Payments have a lot to do with trust so it’s worth the extra explanation.

For those respondents who say they love it, it will be interesting to see how their evangelization of Apple Pay helps increase its penetration with both other Apple users and merchants. First adopters and tech cheerleaders influence how the rest of us use our devices. With a product like Apple Pay, it will be an important part of it gaining traction. It’s one thing to have your issuer tell you to use it, but if your friends are telling you it’s quick, easy, and safe, then you are more willing to give it a try. Since it’s working well for almost everyone, that first beautiful experience will lead to more, and then it will be second nature.

Of course, one of the future big uses of Apple Pay is within apps, even though the number of available apps is right now quite limited, I would be curious to see what the feedback is after Cyber Monday. We know consumers are shopping mobile in greater numbers, and in apps in greater numbers, and in those cases the Apple Pay symbol is presented right on the screen so there’s not much chance of the consumer not being aware of its availability. And without lines or a clerk in front of you, it presents an opportunity to try the service without the potential embarrassment of an error or a decline.


 

Seth Priebatsch | Chief Ninja | LevelUp

It’s not super surprising to me that only a very small percent of people opted to use Apple Pay. Mobile payments, by itself, isn’t really enough to shift behavior.

Behavior shift requires awareness and motivation.

The mobile payments programs that have seen success have all been mobile payments + rewards. Starbucks, LevelUp, even MCX is talking a lot about their rewards components. Rewards are critical because they provide that awareness and motivation. The rewards motivate users to pay with their phones. And the data and lifted-sales from the rewards programs motivate merchants to make their customers aware of that new option. (Merchants do after all control all the signage at the POS.)

Right now, Apple Pay doesn’t offer either of those things by itself. So while I think it’s a great product and shifting consumer mindshare in the right direction, until it ties in rewards more tightly it’s going to have a hard time gaining material traction. But, clearly Apple is opening up the door to that type of rewards tie-in. This is why we just recently launched our integration with Apple Passbook to enable merchants to push their loyalty/payment cards right into the mobile wallet. Our Beacon integration lets merchants trigger that right as customer’s walk in the door. And we’ve got even tighter integrations with Apple Pay coming in the future.

So while it’s not big numbers yet, I think Apple has, per usual, enabled an ecosystem that’ll help them get what they need to drive usage over time, namely enabling loyalty and rewards to tie ever tighter into the payment.


 

Paul Purcell | Principal | Continental Advisors

In terms of usage, the data would suggest very limited penetration which is to be expected. Consumers don’t understand NFC and it takes an affirmative action on the consumers behalf to initiate – untrained consumer behavior with little benefit for shift is a tough nut to crack – we know that from many other attempts prior to Apple Pay.

In terms of why consumers didn’t use it, does this mean Apple Pay will need in store branding for acceptance? Get the popcorn out – let’s see that rumble for turf play out between networks and retailers!

What I take away from the iPhone people not really even being that interested in giving it a shot, I think it shows the early stage of mobile payment we are in and how much of a fail Passbook has been. Apple Pay is a two step function. Consumers must embrace Passbook to achieve utilization. Consumers don’t know how to pay with their phones and don’t use Passbook. That’s a hurdle.

It’s not surprising that those who have used it, love it. The “surprise and delight” of paying with your phone is without argument – but it’s not enough to move the market in a meaningful fashion.

The most staggering statistic to me is that only 56.1 percent of people registered only one card. I would have thought closer to 90 percent of higher. I’d love to get the scoop on the 44 percent that have loaded multiple cards to understand why they did it, have they toggled cards and was a debit card the original card or any of the cards they loaded? I think that this says that there’s great hope for issuers that may be worried they can’t incent consumers to swap cards in a digital world – and for Discover or PayPal for being “left out” of round one.


 

Dr. Thomas Rand-Nash | Director of Operations & Strategy | Brighterion

These results are not surprising, and in line with what we would expect for adoption. There is no doubt that Apple Pay is a great experience for Apple device users. However, adoption of an intangible service–like payments–always takes a long time with the public, even when the public in question–Apple device users–tend to be early adopters. Changing consumer behavior requires making the public view the service less as a novelty, (which current Wireless In-store payment methods are seen as) and more of a necessity to add convenience in a busy world.


 

Grant Storry | Director of Mobile Payments | Digital River

Mobile payments are a new payment paradigm. I predict mainstream usage will be a quiet revolution over the long term as more devices support it, and more merchants accept them in clever ways. All of us in the mobile payments space face quite a challenge when asking customers to form a new habit or recondition an existing one. Each of these efforts constitute critical steps forward as we rewire the market toward mobile payment as method of choice.


 

Jeremy Gumbley | CTO | Creditcall

“We’re creatures of habit, so getting consumers to change how they behave is always a challenge. Consider the early gripes with the iPhone sweep-screen technology when everyone was accustom to buttons. In order for consumers to behave differently then they need to perceive a problem has been solved with the use of technology, or rather, an action such as payment has become more convenient. Perhaps what this data indicates is that consumers don’t feel there is a problem to solve right now, or that it’s really all that more convenient.”


 

 

So, tell us, where do you stand?

 

Comments
  • chris parks

    I have an iphone 6 and use PNC Bank. I set it up the first time, and, contrary to PNC’s website that states that Apple must do a “simple verification”, customers have to call PNC and go through a verification process. While I understand a level of security, the problem is: if for some reason, you have to re-register (maybe you accidentally deleted your passcode, or had to restore your phone, or have it replaced under warranty), you have to call PNC.. AGAIN… and go through the entire verification AGAIN. I deleted the passcode because I got tired of entering it, but then decided I would like to use Apple Pay again. I refuse to use it based on PNC’s convoluted process. Why couldn’t I simply answer some security questions from my iphone (stuff that only I would know) ??? Not to mention that it’s costing PNC a lot of customer service time for something that should only need to be approved once. Give me a break !

    • Alberto Colin

      Is so easy with CItibank and Wellsfargo, is not an ApplePay Issue, your bank is not working good with apple to verify and share your bank information.

  • Alberto Colin

    I love my #ApplePay but I did NOT buy anything on #Blackfriday I prefer to stay in home with my family< I'm tired of making lines to enter a store, and 2 hours line to pay…. this year I'm buying online !

    • Jeff Meredith

      Me too. I shopped with ApplePay at Macy’s but did not during Black Friday. My buying online also includes buying with Apps that use ApplePay and buying gift cards for services that I can’t otherwise get like Hotels. Yes there needs to be more adoption of NFC/EMV terminals which is supposed to be occurring in 2015.

  • RF9

    This isn’t terribly surprising. I made sure my wife has Apple Pay working on her iPhone 6 and yet she still never uses it. She simply doesn’t think to use it or doesn’t know if a store takes it. Myself I often find it difficult to figure out if a store will accept it. If it seems obvious they do, I try it only to have a merchant tell me it isn’t active. So I don’t really bother to try anymore. It’s just easier to pay with a car at the moment. Still I prefer to use it when I can which seems to be rarely so far.
    I think over time, years, it’ll catch on as word of mouth spread and more merchants accept NFC payments. Right now a lot don’t seem to or it’s hard to tell if they do.

  • RF9

    This isn’t terribly surprising. I made sure my wife has Apple Pay working on her iPhone 6 and yet she still never uses it. She simply doesn’t think to use it or doesn’t know if a store takes it. Myself I often find it difficult to figure out if a store will accept it. If it seems obvious they do, I try it only to have a merchant tell me it isn’t active. So I don’t really bother to try anymore. It’s just easier to pay with a car at the moment. Still I prefer to use it when I can which seems to be rarely so far.
    I think over time, years, it’ll catch on as word of mouth spread and more merchants accept NFC payments. Right now a lot don’t seem to or it’s hard to tell if they do.

    • http://bit.ly/11F2eas Philip Cohen

      As soon as the retail banks (who are paying the Apple fee) figure out how they can avoid the Apple fee, they will …

      • RF9

        There is no Apple fee Bypassing credit card fees is exactly what CurrentC is going to do, and it’s already a spectacular failure.

        • http://bit.ly/11F2eas Philip Cohen

          “There is no Apple fee”? Apple do it for nothing? Of course not. And that is why I said, when the banks figure out how to to avoid paying Apple’s fee, they will …

          “Bypassing credit card fees is exactly what CurrentC is going to do” CurrentC is a joke and if not still born will die soon after birth; if you think otherwise you are delusional …

          • RF9

            OK, I suffer from reading comprehension apparently. I was thinking of the merchant paying a fee when you were saying banks paying Apple a fee. I agree that banks would love to do that. They currently pay Apple .15% (15 cents on every $100) out of the 2-3% that is collected from merchants between CC companies (Visa, etc.,) the payment network (Apple) and the bank. I don’t know a lot about the details of how banks collect money, but as I understood they’re giving up .15% because it saves them money elsewhere. Also, I’m not sure (technically) how banks would bypass Apple Pay. Apple pay is just the front end to the transaction, just like Pay Pal, Amazon Payments, or Google Pay. They’d have to create their own app and mobile payment system. So far they’ve been unsuccessful, it’s very costly (probably greater to create cost to create a competitor than what it cost to pay Apple) and would be less convenient to the customer (not seamless.) Look how bad CurrentC looks to be. Apple Pay is actually bringing money to the Banks. It would be biting one of the hands that’s feeding them. At least for the short term. I couldn’t tell you what the payment landscape looks like 10 years from now.

          • http://bit.ly/11F2eas Philip Cohen

            Agreed, the Apple fee is 0.15%. But, Apple Pay is simply another intermediary, riding on the back of the retail banks’ existing credit card systems. Apple’s initial advantage is the additional security that it brings with its fingerprint ID, their marketing expertise and the vocal support of its fanboys; it’s disadvantage is that it runs only on the latest model Apple iPhones.

            Apple Pay is not bringing money to the banks; those buyers would otherwise be using their Amex credit cards (oh, woe is me; what to wave? the titanium Amex or the latest iPhone?); will they spend more because they can now use their phone instead of their new EMV plastic? I doubt it …

            On the other hand, the retail banks / MasterCard / Visa are also now offering their own generic online/mobile payment apps—“MasterPass” and “Visa Checkout”—that will operate on any NFC-enabled smart phone, and such apps are as easy to use as any EMV card, usually with an optional no PIN requirement up to $100 transaction value—not even a fingerprint is required; Undoubtedly, Apple Pay will always be attractive to those who like to wave their latest iPhone about; I suspect that many will still find it just as convenient to wave their EMV plastic …

            Forget about all the other intermediaries, because that’s what they ever will be, intermediaries; they all ride on the back of the retail banks’ existing systems.

            MCX’s CurrentC, is a very poor joke if ever there was one—doomed to have the longest gestation period ever and ultimately a stillbirth.

            The problem for all the payments “pretenders” is that ultimately they have to access the payer’s funds in a bank account; the only “interactive” way to do that is via a credit card, DEBIT MasterCard or EFTPOS card; the nominal-fee ACH direct debit that eBay’s “PreyPal” prefers (and CurrentC intends to use), is not interactive; such payments are aggregated by the banks for overnight settlement, and if insufficient funds/credit are available, the debit will be reversed the following day; therefore such direct debits are not suitable for payments for goods/services that are going to immediately walk out the door (without the addition of an un-maxed credit card as a backstop).

            With the advent of “MasterPass” and “Visa Checkout”, eBay’s clunky “PreyPal” is now effectively redundant, except for its effectively mandated place on the atrophying eBay marketplace and for those other small merchants that don’t have the confidence of their own banker …

            Apple Pay—the greatest media/marketing beat up yet of the 21st century!

            Too bad all that hot air will soon enough cool …

            Retail Payments—The Reality … http://bit.ly/1nSA1Zl

          • Guest

            Even a small spark can create a forest fire.

        • Intrigued

          Then who charged me a 50% markup on a Twix bar at the vending machine when I used ApplePay to pay? Machine said $1.00, verified $1.00 purchase price after I made my selection, but then I see a $1.50 charged for the transaction on my credit card statement? Someone is charging a fee to use it, and it doesn’t say who!

          • RF9

            You got ripped off. That wasn’t an Apple pay fee, it was an overcharge and you need to get them to refund you and fix their system. It’s should be identical to making a credit card purchase. You’re not charged an extra fee for using a credit card (that’s illegal.) Using Apple pay is just using a credit card from your phone. It’s literally the same thing. The only difference is the user interface on the phone and some back end token transaction and virtual card number which is part of the credit card processing system.

          • http://bit.ly/11F2eas Philip Cohen

            Yes, Apple’s cut of the discount fee is 0.15% of the transaction value, but that equals only $0.0015 or 0.15 cents, not 1.5 cents …

          • RF9

            Yah. I had $150 in my head, not $1.50.
            Stupid mistake. Good thing I don’t work for NASA. :)

          • Intrigued

            Something tells me that I’m not going to have much success getting my 50 cents back from either the vending machine or my credit card company. Not worth the effort for what amounts to an extra charge of $1.50 total across those three purchases I made, but it sure is a hit to my willingness to try using ApplePay in the future, whether it’s their fee or not.

          • http://bit.ly/11F2eas Philip Cohen

            Did you read the 27 pages of fine print on the vending machine well enough; maybe there was a minimum charge/surcharge applicable; remember, when the US Congress last interfered with interchange fees the card companies dropped their already established nominal fee for petty purchases …

    • maxbaxter

      What problem does AP solve? How is better than the alternatives?

      • RF9

        The alternatives being PayPal mobile payments, Google Wallet, and swiping a credit card. There are a few others but as far as I know the story is mostly the same.

        The only thing is solves is security over credit cards. The only other thing is added convenience. It’s by no means necessary or solves a big problem.
        The biggest problem it solves is created by Apple. They haven’t opened up use of their NFC so they are the only ones that can use it on the phone. If it was open, you could also use Google Pay or potentially any other competing service.
        If that was the case, the way Apple stores the card is the only advantage (security.)

        So Apple Pay is not better per-se. It’s just the only NFC option for an iPhone user. It’s also arguably a little more secure.

        1) It’s pretty secure. PayPal and Google wallet are relatively secure if you use 2-auth and don’t expose your credit card. The weakness is only in hacking your PayPal or Google account. Apple Pay doesn’t store your credit card anywhere where it can be retrieved. It’s only in the secure element where it cannot be read. Apple Pay links it to a virtual credit card and uses the tokenized payment system (credit card industry standard.) So it’s nearly impossible for fraud or theft.

        2) Apple pay rides on standard NFC. Google Wallet is the only other payment system I know of that uses it except for NFC enabled credit cards. PayPal uses geofencing and I found it to be extremely confusing to use. A paypal rep was on-hand to help people use it as no one could figure it out on their own.
        It works once you figure it out, but at this point it only works where PayPal is accepted. ApplePay uses any NFC enabled credit card terminal with nothing special set up.

        3) A slight convenience of paying with the phone if you don’t have your wallet or it’s less accessible. That’s an argument for NFC payments more than Apple Pay. Specifically the Apple Pay with secureID is pretty frictionless with only about 2 seconds. Just touch the TouchID sensor and it pays (no unlocking or PIN needed)

        • http://bit.ly/11F2eas Philip Cohen

          “Pay Here With PayPal” mobile is another very poor joke; another of eBay’s Johnny Ho’s delusions. Next time anyone visits Home Depot, ask a cashier how “Pay Here With PayPal” is going—LOL.

          Regardless, the new generic NFC wallet offerings from MasterCard (“MasterPass”) and Visa (“Visa Checkout”) will extinguish any faint hope (always delusional) that the clunky “PreyPal” ever had of making any headway in mobile payments, they will eventually kill “PreyPal” in the off-eBay online space too …

          Goodbye clunky “PreyPal”, it has not been nice knowing you … http://bit.ly/UVXx53

          • RF9

            No kidding.

          • http://bit.ly/11F2eas Philip Cohen

            .MasterCard’s “MasterPass” and Visa’s “Visa Checkout” online/mobile wallet apps are not intermediaries; they are in-house extensions of those statutorily-regulated credit card systems; if you prefer to trust your details of identity to an intermediary that is another totally separate entity simply riding on the backs of those existing retail bank systems, that is your choice. eBay’s clunky “PreyPal” would be the ideal candidate for such a choice—Ho, Ho, Ho …

            Mark my words, these two logical extensions of the existing card systems by MasterCard and Visa will eventually bury the “pretenders”, particularly in the online payments space …

          • RF9

            Why does that make a difference (that try are not intermediaries?) There is a barrier of entry (sign up) that, for example Apple Pay doesn’t have. With Apple pay you just scan your card and it’s working. Also in the case of Apple they don’t know your info such as purchases or card number. Use and entry is frictionless. The last time I looked up how to sign up for thise two I was confused as how or why I should use them. How will that ever gain mass adoption. How is it less clunky than PayPal?
            I know you hate Apple and PayPal and your agenda is to counter their marketing. You make that clear with your dramatic comments. But why are these actually better for consumer and how will they bury them.

            I’m just trying to understand why the intermediaries serve less purpose.

            Also with Apple Pay it’s not their business model. It’s merely a value add to sell hardware. They made it clear that this isn’t intended to be their business. Apple only has to break even and they don’t command a big fee. It’s “successful” if people use it and it sells more phones.
            If you believe this article, Apple Pay is a failure on Black Friday. How is any payment system including those from MC and Visa going to succeed where Apple Pay is failing if Apple Pay is lower friction and higher convenience?

            Maybe I’ll just go read your truth about payments article. It was long and I didn’t have time but I’ll check it out soon.

          • http://bit.ly/11F2eas Philip Cohen

            If you see no difference between dealing directly with one of the statutorily regulated credit card companies and dealing with a virtually unregulated intermediary like eBay’s “PreyPal”, so be it; I would simply suggest that you Google “PayPal horror stories” or the like: currently 1.8 million hits …

            It may well be relatively simple to load cards onto Apple Pay but how many people have the latest iPhone 6 and how many of them care to use it for payments—if they can find one of the only ~200,000 of the ~nine million merchants in the U.S. that support EMV, let alone NFC?

            I don’t use a smart phone so I am not interested in the mechanics of loading the relevant apps/cards onto a smart phone for use thereof at physical point of sale; my EMV card works perfectly well at all the merchants in Australia, all of whom now have at least EMV terminals and most of whom have EMV+NFC terminals …

            Regardless, I find it difficult to believe that the simple scanning of a card will load it onto Apple Pay without some form of security check. Merchants don’t get any information not necessary to the transaction via “MasterPass” or “Visa Checkout” either; they aren’t less easy to use than “PreyPal” for online purchases; they are just as easy to use as “PreyPal” for online purchases, and you are not dealing with a clunky intermediary. How will “MasterPass”/”Visa Checkout” bury “PreyPay? By providing merchants a cheaper discount fee; PayPal’s discount fee is ~2.9%; I doubt anyone with a merchant account with a real bank pays any more than ~1.9%. Intermediaries have to make their money from somewhere; invariably it is the difference between what they pay the banks and what they then charge their merchants; “MasterPass” and “Visa Checkout” will succeed because they will run on the much greater number of other non-Apple NFC-enabled smart phones …

            My MasterCard-issuing bank does the whole initial activation process for my cards on “MasterPass” completely automatically using the existing personal details already known by the bank—that’s even easier that loading cards onto Apple Pay …

            Loading my MasterCard and Amex cards onto “Visa Checkout” was done during an online purchase from a merchant that was advertising support for “Visa Checkout”; I simply clicked on the “Visa Checkout” logo and the interface took me to the Visa registration site …
            https://checkout.visa.com/index.jsp?country=AU&locale=en-AU#
            I then put my personal and card details in as I would have done to use the card directly, specified a login and password and supplied a couple of security question answers; thereafter the purchase was approved, and away I went; now, whenever I see the “Visa Checkout” logo, I know I only have to log in with my email address and my password …

          • Jeff Meredith

            Philip, I have loaded five MasterCards and Visa onto Apple Pay. Each one did require a two factor authentication at initial setup. This was just a one time step. Most of them were texts or emails. In the case of my primary card, it is in my wife’s name and she got the text.

            Australia and Canada with their heavy NFC adoption would be likely places to extend Apple Pay.

          • http://bit.ly/11F2eas Philip Cohen

            Jeff, did you notice that I have already mentioned that to load all my bank-branded cards onto my bank’s “MasterPass” NFC wallet service all I had to do was go into my internet bank account to the “MasterPass” page and click on “Activate” and everything was set up automatically from the account information that they already had; did not even have to set a password, it defaults to my internet bank password … not even the usual two factor authentication that is required for adding a new payee or the like; the process could not possibly have been any easier; well, I did have to log into my net bank account first; such an effort …

            And, “MasterPass” will load onto any NFC-enabled smart phone—except iPhones, I presume; then, I don’t use a smart phone so my EMV card works perfectly well at POS, particularly with NFC terminals (no PIN required up to $100); and I have not come across a merchant in recent times that does not have NFC …

          • Jeff Meredith

            Philip, that does sound like easy setup. I didn’t at all find Apple Pay’s setup burdensome but that is certainly simpler.

            In the US, I have been a big proponent of Chip and Pin and have two credit cards and one Travelex Debit card which are true Chip and Pin, not the Chip and Signature abomination.

            Alas, I have found lots of POS terminals that have the Chip and Pin slot but none! that are turned on. Their payment providers are just not offering it yet. And if ignorance about Apple Pay is out there, it is even worse in the US for Chip and Pin.

            I will gladly use and have used my Chip and Pin Cards in Europe and Turkey and will use them here when the merchants turn on the capability.

            Funny when hunting for Apple Pay accepting merchants the first thing I look for on the POS terminal is a slot for a Chip and Pin.

            I am very jealous of the rest of the world’s use of Chip and Pin. The US has brought a lot more attention from cyber criminals by our non-adoption of Chip and Pin to this point.

          • http://bit.ly/11F2eas Philip Cohen

            “Their payment providers are just not offering it yet.”

            Given that the U.S. leads in so many avenues of technology such situation is barely comprehensible; then, you have a lot more players involved and if consensus cannot be reached about the best way to control the weeds then invariably the weeds keep growing …

            I think things are somewhat different in Australia, as a relatively small POS merchant at one time I only every dealt with my bank; not sure what happens with the larger retailers with scores of terminals; but I am not aware of the intermediary processors and equipment suppliers that appear to abound in the U.S.

            We have had Chip+PIN mandated since August this year, and it appears to work well …

            Logically, chip+signature never saw the light of day in Australia; then, that may be because there are a lesser number of players involved; here, the Australian big four banks basically control the market …

            Apple’s clear advantage is its brand and its marketing ability, and probably, even more materially, all its fanboys; as I have previously said, never before have I felt such a rush of hot air; there was even talk from some idiot commentators of Apple killing off the existing credit card systems! …

            No doubt Apple Pay offers an effective level of security, but its strange that the U.S. banks are falling over each other to endorse same, rather than promoting what is effectively their own new system wallets, “MasterPass” and “Visa Checkout” …

            My form of logic tells me that “MasterPass” and “Visa Checkout” will win out in the end because they are the perfectly logical and natural extensions of the existing credit card services—for which there is effectively no alternative for physical point of sale transactions; and the potential “mobile” payments market is much bigger than the relatively expensive iPhone alone can ever service, and surely no one but a dedicated fanboy is going to rush out to buy a new iPhone simple to make payments via it …

            Yes, it’s estimated that the U.S. processes ~33% of the world’s credit card payments but has ~50% of the world’s credit card fraud; from that point then it’s not hard to see why U.S. banks are happy to promote the greater security of Apple Pay at only a 0.15% fee; still, credit card details still remain available to be exploited by fraudsters; I look forward to the day when the credit card number becomes non-operational for card-not-present purposes; indeed, with the advent of tokenization, for all purposes …

          • http://bit.ly/11F2eas Philip Cohen

            “Why Apple Pay Is Fizzling and What It Means for the Future of Mobile Payments”
            http://www.pymnts.com/news/2014/why-apple-pay-is-fizzling/#.VII_-q0cRzk
            Interesting analysis …

        • Jeff Meredith

          RP9. Well stated.
          I just wanted to add a few things. By using Apple Pay you don’t have to worry about who has your credit card number. I had credit cards replaced three times last year thanks to Target and Home Depot.

          With Apple Pay in stores or with Apple Pay in apps such as Groupon, Staples, Target, Gyft, Panera, Sephora, Houzz, Uber, Lyft, Hotel Tonight, etc. I don’t have to enter my credit card info and don’t have to change it when the next Sony, Target, Home Depot, P.F. Chang’s, Neiman Marcus, Jimmy John’s incident comes along.

          For example, if McDonald’s gets hacked, if I used Apple Pay they don’t have my credit card number so I have nothing to worry about. Also true for Panera, Groupon.

          Another advantage is a list of transactions in PassBook which is useful for monitoring fraud.

          I have three credit cards that are Apple Pay only that I keep at home. They are free and have various purchasing advantages depending on the product. If my cards get replaced again I know that I can use those until the time my cards are replaced and I can compare activity to what’s on my phone.

          At this point with credit cards, I’m surprised they’re not just sending a new one every three months automatically.

          • http://bit.ly/11F2eas Philip Cohen

            The fact that Apple iTunes has retained millions of credit card details for recurrent online sales makes it just as susceptible to hacking fraud as any of the other major retailers that retain credit card details.

            At the very great majority of transactions, which occur at a physical point of sale, card details are not discernable unless deliberately skimmed by a fraudster from the legacy magnetic strip. Such skimming will ultimately be no longer possible with the greater security of the new EMV cards, and no doubt the mag strip and the matching “Stone Age” readers will soon be eliminated with the fraud liability shift in 2015.

            The problem only arises with the retention of credit card details by merchants for online sales. The retention of such card details is discouraged by the card companies because of the very possibility of such hacking fraud, and, again, Apple also retains credit card details and is probably just as susceptible to such hacking.

            No credit card details are discernable when a consumer pays for an online purchase via the new professional online/mobile wallet extensions to the credit card system from MasterCard and Visa, “MasterPass” and “Visa Checkout” …

          • Jeff Meredith

            Philip, I couldn’t agree more. Apple iTunes (not Apple Pay) is just as susceptible as every other merchant who maintains credit card data. I would love to see Apple “eat its own dog food” and permit payment of iTunes by Apple Pay. Because of the forward nature of the transaction you might have to keep a positive balance for future purchases and then replenish.

            I do this for my EPass highway toll system. When my account gets low I get charged another $50.

            Ideally, as consumers we want the number of merchants holding onto our credit card information minimal and on a need to know basis. Apple iTunes is a service and not on a need to know basis.

          • http://bit.ly/11F2eas Philip Cohen

            Yes, eToll systems are another that accept payments via credit card and retain the details for automated irregular recurrent charging. The way out of that would be for them to only accept an authority to direct debit your bank account; then, no authority, no charge, no credit card fraud risk; and, they wouldn’t be paying the higher credit card discount fee either—the dream of the MCX Group!

            Maybe there will eventually be a way to set up “MasterPass” or “Visa Checkout” for such authorised recurrent charging, without the “merchant” receiving the credit card details, particularly for petty amounts for the likes of recurrent eToll charging …

            Bearing in mind that as the new “MasterPass” and “Visa Checkout” services are the natural children of the retail banks, I have no doubt that given a little time all online “merchants” of any substance will be offering one or the other in place of “legacy” credit card payments—and the hated “PreyPal”.

            Apple doesn’t allow payment for iTunes by Apple Pay? That’s interesting. The discount fee paid by a merchant is set by the acquiring bank; Apple, as a very large merchant, could possibly be paying a discount fee of something like ~0.5% on is credit card transactions; I don’t see how they would pay any more, as the merchant, if they allowed payment via Apple Pay; indeed, they should get an additional reduction of 0.15% …

  • Intrigued

    Tried using ApplePay at a Staples two weeks ago, didn’t work at all. Okay, chalk that up to cashier error or something wrong with Staples POS. So I did manage to use ApplePay at a couple of vending machines in hotels while traveling last week. Was very disappointed to be charged $1.50 for things that were labeled $1.00. Turned me off of using ApplePay elsewhere because I don’t know if the fee was driven by the vending machine owner, the hotel chain, or by Apple, and there were no signs or warnings on the machine or through ApplePay that this fee was going to be charged. Am I going to be charged fees elsewhere without warning? Very shady.

  • http://http:www.stieldirect.com Dan Stiel

    For a payment product on the market for just a few weeks, “Only 4.6 percent” is actually a very, very good number, given the very early product cycle stage where Apple Pay currently sits.

    Limited merchant acceptance (and consumer uncertainty surrounding acceptance) more than anything will slow Apple Pay from moving higher in the “consideration set” among Apple 6 users – a problem that will diminish over time as consumers gain greater confidence.

    • Guest

      Don’t forget that the 4.6% number is out of users who have access to apple play and shopped at stores that accept it. Actual usage in the market is drastically lower because most stores don’t accept it and most consumers don’t have an iPhone 6.

    • Christopher Harrison

      Hogwash, Dan – as Guest said below, 4.6% of iPhone owners who had ApplePay activated on their phone is a trifling number so as to be statistically insignificant. Actually, no, it is very significant in that shows virtually no interest in this product….Apple is playing with stuff way out of their ken, trying to cash in on something they little understand.

      • http://bit.ly/11F2eas Philip Cohen

        Apple Pay—the greatest media/marketing beat up yet of the 21st century!

        Too bad all that hot air will soon enough cool …

        Retail Payments—The Reality … http://bit.ly/1nSA1Zl

    • maxbaxter

      [Only 4.6 percent of those who had phones that could enable Apple Pay who could have used it to pay did so. ]
      iPhone in total has some 25% market share in US… significantly lesser outside of US.
      If you keep filtering those how do not have iPhone 6, those who did not activate, those who do not have the right card, and those who don’t use the Apple web environment much… and if you consider the small number of participating merchants… plus more… I am surprised that anyone used it. Then consider that normal curve of repeat use which is another filter.
      But… let’s just wait and see.

  • Guest

    Maybe Apple pay is too convenient, and people want the old way?

  • shatner

    People are still stuck in the past. We’ve all been taught to ‘swipe your card’, and this needs to change

    • http://bit.ly/11F2eas Philip Cohen

      “Swipe” your card; indeed, compared to the rest of the world, the U.S. is stuck in the past; the great majority of merchants are still using primitive “swipe” terminals; but that will change and it won’t be because of Apple Pay but because the retail banks and MasterCard, Visa, Amex demand it …

  • http://bit.ly/11F2eas Philip Cohen

    “All of these people had a phone in their hands that had Apple Pay functionality and were standing at a register that had NFC.

    “And they didn’t.”

    You mean to say that they passed up the opportunity to wave about their new iPhone 6 and instead used that primitive piece of plastic? Oh, dear me, the Apple fanboys will not be pleased.

    Still, one day there will be MCX’s CurrentC … ho, ho, ho …

  • Christopher Harrison

    @PYMNTS: “…launch of Apple’s revolutionary payment method…” Seriously?? Who, other than Apple, has declared that ApplePay is REVOLUTIONARY???? Wallets have been around since the advent of ebay and PayPal followed by Google, just two name two. There is nothing revolutionary about ApplePay except that Apple’s arrogance has finally shown through.

    • Rudy™

      Yep. As always, apple claims to have invented something that’s been around for years on other platforms. Arrogance indeed. Meanwhile the rest of us are telling the zealots, “Welcome to 2012.”

    • Матт Реякіпѕ

      Google Wallet … without Apple Pay you wouldn’t even know what Google Wallet was. Almost no one in the US used NFC before Apple Pay came out. I use Google Wallet and everywhere I went I got “What’s Google Wallet’. The moment Apple Pay was announced people starting realizing what Google Wallet was. Apple isn’t first but they made mobile payment something people are starting to care about. Without Apple Pay, Google Wallet would still be unused. BTW without Apple, Android would be more like BlackBerry. So don’t act like Android/Google is the innovator.

      • maxbaxter

        You are absolutely right. Google Wallet has been a bigger failure than Apple Pay. The soft bigotry of low expectations. And Isis beats them all. Isis: 1B in a hole. GW: 700-800M. AP: don’t have an estimate.

        • http://bit.ly/11F2eas Philip Cohen

          The new NFC mobile/online digital wallet offerings from MasterCard (“MasterPass”) and Visa (“Visa checkout”) will eventually bury all the intermediaries, including Isis, and the clunky “PreyPal” …

          • maxbaxter

            What problem are they solving that has not been solved before or how are they better than the existing solutions?
            IXs’ wallets have been around for about 2 years now in various incarnations. Adding mobile modality to the 4 party model changes nothing.

          • http://bit.ly/11F2eas Philip Cohen

            MasterCard’s “MasterPass” and Visa’s “Visa Checkout” online/mobile wallet apps are not intermediaries; they are in-house extensions of those statutorily-regulated credit card systems; if you prefer to trust your details of identity to an intermediary that is another totally separate entity simply riding on the backs of those existing retail bank systems, that is your choice. eBay’s clunky “PreyPal” would be the ideal candidate for such a choice—Ho, Ho, Ho …

            Mark my words, these two logical extensions of the existing card systems by MasterCard and Visa will eventually bury the “pretenders”, particularly in the online payments space …

      • Christopher Harrison

        As most zealots, you only read what you want to read and disregard the rest. First of all, the bigger takeaway in my remark was PayPal. Ever heard of them, smart guy? They are pretty successful. Second of all, you have absolutely no idea what you are talking about her you say that no one heard of NFC before Apple brought out ApplePay – NFC HAS BEEN AROUND AND IN USE FOR YEARS!! Major card associations, petroleum distributors and interstate highway toll systems, just to name a few. Get your face out of Apple’s collective ass and take a look around the world before you go off half cocked about something about which you clearly have no information other than your Appple-Love fixation…idiot

        • http://bit.ly/11F2eas Philip Cohen

          When you say PayPal, I hope you’re not referring to their “wallet”. Next time you see the “Pay Here With PayPal” sign, at Home depot or Toys R Us, or wherever, ask the cashier how the PayPal mobile wallet is going—LOL …

          • Christopher Harrison

            lol, I actually was referring to their mobile wallet only to point out that Apple is certainly not revolutionary. Unless you consider leveraging a leading Smartphone to fail at something already proven to be a failure by Google and PayPal…lol

            On that topic, PayPal’s eCommerce wallet is incredibly successful; much more than ApplePay or iTunes. They have also launched a very successful PayPal “credit card” to allow its customers to swipe transactions at any retailer who takes Discover – NFC capability to come in 2nd QTR 2015. It hasn’t been used in a huge way but it works, it’s easy and it is a way for PayPal wallet customers to go face to face.

          • http://bit.ly/11F2eas Philip Cohen

            “PayPal’s eCommerce wallet is incredibly successful …”

            Once again, if you are referring to PayPal’s “mobile” wallet, the “Pay Here With PayPal” operation, and you think that that has been successful, you are delusional, or you have been absorbing to much of the disingenuous nonsense that habitually emanated from the eBay Dept of Spin …

            If you are referring to PayPal’s online operations, then yes, they have been successful; they have had a ten year start and the advantage of being effectively mandated on the eBay marketplace. Nevertheless online payments are still a very small part of total ecommerce payments and “PreyPal” actually has only a small part of those online payments (It’s estimated that “PreyPal” has about one percent of total payments volume—chicken feed compared to MasterCard, Visa and Amex. Discover is likewise a minnow amongst the big players also with about one percent of total payments).

            Needless to say, the banks have finally recognised that they have ignored online payment too long and PayPal’s unopposed time in this area is at an end; the eBay marketplace is atrophying under the direction of the cretinous Johnny Ho; and the world’s retail banks and the two major credit card companies have now launched their own similar more professional online/mobile wallets (“MasterPass” and “Visa Checkout”) …

            The reality is, “PreyPal” is a clunky intermediary, a parasite; everything they do is done on the back of some retail bank or the ACH / MasterCard / Visa systems; even their PayPal-branded debit card is a MasterCard; Discover? Discover is obviously desperate to consider letting “PreyPal” put their brand on one of their cards! The reality is, except for PayPal’s mandated place on the atrophying eBay marketplace and its deserved place as the merchant account provider of last resort, the clunky intermediary “PreyPal” is now redundant …

            Goodbye clunky “PreyPal”, it has not been nice knowing you …

    • maxbaxter

      PYMNTS did. They still do, as you can see. This is no longer amusing, it’s pathetic.

      • Christopher Harrison

        Uh, that was kind of my point…lol

  • 21Palms

    Thank you Mr. CBS, ABC, NBC new maker / munger. I’d be tempted to think that you’re just trying to make a name for yourself but I know better. You’re a POS who’s available at any price. Go find a pimp.

    And check back in after next October when the whole POS world turns upside down and tell who you’re working for then.

  • http://bit.ly/11F2eas Philip Cohen

    “PayPal App Finally Receives Update To Support Samsung Fingerprint Scanner”

    http://www.androidheadlines.com/2014/12/paypal-app-finally-receives-update-support-samsung-fingerprint-scanner.html

    “With the addition of fingerprint authentication, even your User ID and Password do no[t] have to be entered …”

    Oh dear, even eBay’s clunky “PreyPal” now has a fingerprint ID function on Samsung smart phones. …

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