Apple Pay

Is Apple's Future In-App?

There is little worse than getting one’s momentum muted.

No, we aren’t talking about the 2016 presidential race.

We’re talking about Apple (this is the Apple Pay Tracker, after all), which seemed to be working itself up into a nice little run of some positive press about the next bright horizon for Apple Pay, only to have that momentum disrupted entirely by a glitch.

For seven hours or so on Wednesday (Feb. 10), Apple Pay users that wanted to add a Visa card to their mobile wallet were out of luck. The exact cause of that glitch — and how many customers exactly were affected — remains unknown. The damage, however, seems to have been pretty limited — only Visa cardholders noticed it, and it only was a problem for those entering the cards into the wallet. If one happened to have a Visa debit or credit already in there, no problem, it worked fine.

Mostly minor though it was, it did manage to change the narrative on the Apple Pay news of the week to “Apple Suffers First Major Glitch.”

Assuredly not what the PR team at Cupertino was hoping for.

And probably particularly disappointing, too, since things, for the first time in a long time, actually started out so well this week. There was an early pop of enthusiasm about Apple Pay’s future as America’s go-to in-app payment method as various headlines of one sort or the other led off the week echoing Quartz’s sentiment that the future of Apple Pay is as an in-app payment method.

The cheers should be familiar to anyone who’s been following the Apple Pay headlines — it’s easier, it’s faster, it makes consumers happy — with one notable and important addition. When it comes to in-app payments, Apple Pay is relatively easy to add, a few lines of code (as opposed to a new and potentially expensive POS terminal).

And while there is certainly enough to the app story to be interesting, it might be a little early to declare Apple Pay’s victory as an in-app payments method just yet.

The Good News

The rather short-lived burst of early-week enthusiasm popped up after a note from Piper Jaffray Analyst Gene Munster, saying there has been “an acceleration in the number of apps that accept Apple Pay.” Specifically, Munster noted, when it comes to in-app payments, Apple Pay is at an “inflection point.”

Apple’s future in store may get all the press — the story of the week went — but it is really in app that the long-forecasted hockey sticking is really being seen.

The result is consistent with Apple’s reports to Quartz that Apple Pay is now supported by “thousands” of apps. Apps which, at least in some cases, seem quite happy to be on board with Apple.

“[Adding Apple Pay] was one of the things we’ve been dying to do, and we’ve been thinking about it since we launched our app in July [2015]. Anecdotally, our customers have definitely been asking for it,” Ilia Papas, cofounder and CTO of on-demand meal kit app Blue Apron, which recently announced Apple Pay.

Other merchants reported Apple Pay had improved their overall customer experience. Staples noted mobile checkout times are, on average, 35 seconds less than traditional methods, like credit and debit cards, and Instacart reports checkout is 58 percent faster with Apple Pay (about a minute in real time). Apple Pay is also tied to better conversions for at least some merchants; men’s clothing site JackThreads reports Apple Pay customers are 92 percent more likely to finish a transaction than those who don’t.

Interestingly, only one merchant noted a clear uptick in sales associated with Apple Pay, according to Quartz: Domino Go, an interior design app, reports a stunning 436 percent boost in average daily revenue by including the option. It is probably worth noting, however, the firm is running an exclusive promotion that rewards consumers who use Apple Pay, and that reward may be driving sales as much as the payment method is.

View With Caution

While it is doubtlessly good news for Apple Pay to see a rapid uptick in mobile apps, it seems perhaps it is a bit premature to get quite as excited as some parts of the tech press did this week.

Gene Munster is a respected analyst and a known Apple bull, but even his recent bullishness on Apple is not entirely predicated on his belief in the app inflection point argument; he believes apps are one of many things that will push Apple Pay this year as the service becomes more diverse and thus attractive.

"While 2015 was the year of Apple Pay adoption at banks, retailers and in-app, we believe 2016 will be the year of new features for Apple Pay," Munster noted in a January note. "We believe peer-to-peer will be an important feature to increase overall consumer usage and awareness of Apple Pay and see mobile in-browser payments as a significant addition to the Apple Pay addressable market."

While that could happen, MPD CEO Karen Webster offers a pretty compelling argument about why, when it comes to Apple Pay and P2P, the firm’s reach might actually outrange its grasp.

Second, while it is nice to have “thousands of apps” under its belt, it is at least worth noting that many of those apps are teeny, tiny, little operations that have a few thousand users, some seed funding and a dream. These are not the firms that big ignitions are built on.

As far as the really big players in mCommerce that are snapping up the vast bulk of the dollars being spent on mobile these days — Amazon, Walmart, eBay — go, Apple is seeing no dice, and no dice are expected for a long, long time to come.

And, finally, Apple Pay is not on mobile or desktop at all. When it comes to digital shopping, consumers are still driven by habit to seal the deal on desktops, though Apple Pay could, theoretically, change that equation by making it easier to pay via mobile. Given that phones have limited storage space, it may not be feasible to place an app for every merchant one might want to shop with on a phone, meaning the lack of applicability to mobile Web at this point is still a limitation.

None of which are incapable of being overcome. But, at this point, it seems Apple’s in-app efforts are in a similar place as its physical retail efforts — making progress but not fundamentally changing the way the game is played.

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