Apple Pay

Apple Pay’s Active Week

Apple Pay might not have quite caused the spontaneous combustion of mobile pay that they — and many others — were hoping for a little over two years ago. The numbers are pretty clear: Usage of mobile pay just isn’t quite catching on fire at the expected rate. When customers step up to the POS plate with an Apple Pay compatible phone in their hand, most of the time — as in about 96 percent of the time — they opt to pay some other way.

But if Apple Pay’s adoption figures aren’t quite explosive, team Apple’s enthusiasm for payments remains fairly undimmed, and as Apple Pay’s Chief Jennifer Bailey took the stage at a recent industry event, their expectations remain quite high.

“Everything in your wallet, we’re thinking about,” said Bailey, at the Code Commerce Series event in San Francisco.

And though she didn’t quite elaborate on how Apple was going to manage to go after all of that “everything” — she demurred on a direct question on digitizing ID cards — Bailey certainly had a tale of progress to tell this week. The big news was Apple’s growing acceptance among merchants and its big tie-in with Square.

Getting slightly less press is how Apple is sweetening the deal for users to get them actually engaged with the service.

Apple says it has 35 percent of U.S. merchants

Perhaps a bit tired of the consistent drum beat that Apple Pay’s adoption is lagging below expected levels, Bailey was rather explicitly making the case that Apple is growing deeper roots than it’s getting credit for.

Bailey claims that in the short span of two years Apple has managed to move from four percent of U.S. retailers to 35 percent of retailers — representing about 4 million locations.

She credits the EMV switchover for a lot of that pick-up — not because EMV readers tend to carry NFC capacity (which makes retailers able to accept mobile pay at all) with them, but because EMV readers are “annoying.”

“Once you figure out you have to dip, you wait awhile, you wait awhile,” Bailey said.

She went on to mimic the “BEEP BEEP BEEP” that those chip card readers make — and noted it contrasts unfavorably to the pleasant ringing sound that accompanies an Apple Pay transaction.

Not that she thinks EMV is necessarily deserving of scorn.

“Knocking EMV is not necessarily the way to go,” Bailey says, “I think it’s to increase acceptance and work with great partners.”

(We feel compelled to point out two things: merchant acceptance does not mean usage. And in our studies on consumers presented with the option to use Apple Pay at a store that accepts it, consumers actually said that they liked their method of payment just fine — at a percentage that has increased since EMV terminals were installed.)

Bailey also noted that retail partnerships are slated to expand in 2017, with Gap Inc. being the name she dropped among big retailers it’s targeting to enhance that growth. She also noted that Apple will continue working with its partners to push out Apple Pay related offers — like the reward points it is offering through American airlines.

Speaking of partnerships, Apple Pay’s other big news this week was about its move to collaborate with Square.

Apple and Square — paying together

Also on offer at the Code Commerce Conference this week was the joint announcement from Apple and Square that customers will be able to add money stored on a Square virtual card — in the Square Cash app — to their Apple Pay mobile wallets.

That means going forward, Square Cash will work any place Apple Pay works.

“People just want a more modern interface to their finances,” said Square (and Twitter) CEO Jack Dorsey of the partnership.

The end game of the team-up is to drive greater consumer adoption of both services — and, according to executives from both firms, to increase consumers’ access to a more secure option than they currently have on offer from their card companies.

And also to offer them a better experience, noted Dorsey.

“We see this growing,” said Dorsey. “The rest of the world is mainly tap.”

“The benefit to Apple Pay, in our experience, is that it’s much better and it’s much faster,” said Bailey.

Now if only consumers agreed with that sentiment …

Bringing consumers along

Before the official tally of Apple Pay merchants and the big Square news, Apple had one other big announcement about Apple Pay to kick off the week.

Blackhawk Network has announced that it will integrate gift cards, e-gifts, loyalty and rewards programs into the mobile pay system.

Going forward, Apple Pay users will be able to load their prepaid gift cards and store rewards and loyalty points from participating merchants.

Blackhawk has previously worked with Samsung Pay and PayPal to bring gift cards to those mobile wallets via its digital stored-value system.

“Blackhawk is working with our vast partnership network to lead the digital transition of different forms of branded value such as gift cards, e-gift and loyalty,” Talbott Roche, CEO and president of Blackhawk Network, said in a press release.

Teri Llach, chief marketing officer for Blackhawk, noted in an interview that consumers will be able to load gift cards and loyalty information in Apple’s Wallet app by taking a picture of the physical card with their iPhone’s camera — or by manually entering data if they prefer. Apple and Blackhawk will work directly with merchants to add gift card and loyalty programs to Apple Pay, though neither firm has disclosed what the timeline will look like.

“Everyone knew that consumers wanted [gift card and loyalty options.] That’s not a big surprise,” Llach said. “But [mobile wallet providers] had to bide their time with such features and wait as they addressed the priorities of everything that had to be done with mobile pay.”

Apple, of course, still has those pesky customers to persuade — but with a rising merchant count and increasing options for wrapping loyalty and rewards around their product, they are certainly investing in making their mobile wallet stickier.

Will it be enough to replace the whole wallet?

We’ll keep counting those usage stats — and give you the big update very soon.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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