Apple has surely managed to deliver a lot of hype with the launch of its mobile payments platform, but according to the numbers so far, it hasn’t really managed to deliver a hit.
Which isn’t to say it’s been a wholesale miss, which, in the world of mobile payments, is actually something of a success in and of itself — just ask the former teams from CurrentC or Softcard (we miss you Tappy, you were our favorite muppet). But it surely hasn’t set the world on fire to pay with a smartphone either, nor did it bring about the mass abandonment of plastic cards that its initial launch caused many to speculate was imminent.
Apple Pay continues to have its boosters, and Tim Cook remains unspeakably enthusiastic about its future. He recently told Asian journalists that consumers are ready to be done with cash, and Apple is ready to help them get there.
“We don’t think the consumer particularly likes cash,” Cook noted. “We would like to be a catalyst for taking cash out of the system.”
However, Apple is not so much interested in benchmarking just how much of a catalyst for taking cash out of the market it is since, as of yet, official numbers for Apple Pay do not exist except as a contributor in the “services” category in which it lives.
Luckily, for the curious, Apple Pay usage is tracked by various third parties — PYMNTS was the first. In fact, we’ve been tracking Apple Pay since almost day one (OK, technically, since day 38, Black Friday 2014) and regularly and routinely updating those figures quarterly.
And our regular readers know that those results have not exactly been earth-shattering. The number of users that have tried and used Apple Pay has increased over time — as you would expect since there are more phones with the app and more places to use it over the last two years — but the number of customers who are using it is declining. In March 2015, 48 percent of those with the app in a store where they could use it reported using Apple Pay “every chance I get.” By Oct. 2016, that figure had fallen to 22.4 percent. All in, when a customer steps up to the POS in a store that can support Apple Pay, 19 out of every 20 of them don’t.
And while the service is well-reviewed enough and consumers seem generally favorably impressed with its speed, ease of use and security, it isn’t particularly memorable. When asked why they chose not to use Apple Pay, the majority of Apple Pay-eligible users have been responding for the last two years that they simply didn’t remember.
For those looking for their next fix of the most accurate Apple Pay information in the market outside of a vault in Cupertino — good news. Innovation Project is coming, and we will be updating our latest and greatest study. We would get a ticket now, if we were you.
But for those starving for data, there was some news this week — new figures out of spending analytics firm TXN on how Apple Pay’s adoption has gone over the last year. According to its release, the firm “looked at our panel of transactions from over 3 million payment cards to learn more about the adoption of Apple Pay by consumers. For some of the card-issuing banks, we are able to distinguish payments made with Apple Pay from other payments.”
And, according to TXN’s data, things are looking up — a little — for Apple Pay.
Just not much…
Growing Usage Rates
According to TXN’s data, Apple Pay transactions grew by 50 percent between Dec. 2015 and Dec. 2016, which correlates to the fact that there are more phones with Apple Pay and more places to use it, including online. The growth was mostly — though not totally — smooth. Apple Pay grew by about 30 percent through the first five months of the year — before ebbing off and returning to growth on the back end.
That does differ a bit from Apple’s Q4 call with investors wherein Tim Cook claimed Apple Pay transaction volumes were up almost 500 percent year over year, and the month of September was busier than what was observed throughout all of fiscal 2015.
The TXN report also listed out Apple Pay’s most popular use locations — both in-app and in real life. HotelTonight, Caviar and Postmates were the top three performers. In the top spot, HotelTonight sees about 3.5 percent of credit card transactions stemming from Apple Pay. That is actually better than it does in the Apple Store, where Apple Pay is only used for between 1 and 1.5 percent of all transactions.
In the physical retail space, Duane Reade and Whole Foods are the big winners, with 1.8 percent and 1.7 percent of transactions, respectively. All other physical store businesses measured at below 0.8 percent Apple Pay usage for transactions.
Still Growing Slow
The good news about being small is that all growth seems pretty big. A five-pound dog that gains 2.5 pounds is still a small dog at 7.5 pounds — even though it did grow by 50 percent.
Similarly, looking at TXN’s numbers, the transactions are very small. At its most successful location in the physical world — Duane Reade — Apple Pay is less than 2 percent of all transactions, and for most merchants, it is still not quite cracking 1 percent. It’s going to have to improve by 50 percent a whole lot more times before the growth is going to feel very significant, and merchants believe that there are enough people using it to go to the trouble.
TXN’s report also noted there is room to grow.
“Apple Pay had strong growth in 2016 but still accounts for a fairly small percent of all credit card transactions, leaving lots of room for further growth.”
With lots of contenders in the ring — including, now, Target.
Target announced that it will be starting up a payments platform all its own. No word yet on whether or not it will be called Target Pay, but we bet that it will be. Target takes Apple Pay in-app as a payment method, but it seems to be the case that it’s said no thanks to Apple when it comes to in-store.
So, it seems that, however happy the headline, Apple Pay is where it has been for the the last year or so: stuck in first gear, trying to get up a very big mobile payments hill.