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Apple Pay a Bust on Black Friday, New Data Shows

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?

 

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