Welcome to Day No. 218 of Apple Pay.
You probably haven’t been counting quite as meticulously as we have here at PYMNTS about what’s happened since Day 1 of Apple Pay, but we‘ve tracked every move along the way. From Day 1 when a few launch kinks were getting worked out (like double charges for transactions), to big new merchants signing on to concerns over fraud issues and its march toward global expansion — the launch of Apple Pay has had its high moments, and a few low ones.
“Did We Just See The Future of Mobile Payments?” was the question MPD CEO Karen Webster posed on Sept. 10, 2014, the day after the full details of Apple Pay were announced. And now, 258 days later we can say that, yes, Apple Pay has certainly paved the way for the future of mobile payments — if only for the fact that it has forced everyone in the mobile payments ecosystem to get their mobile payments game faces on.
So, as we approach Month 9 of Apple Pay, we thought it would be interesting to take a look at the 10 stories that define Apple Pay’s journey.
Apple Pay launched with agreements in place with three of the major networks American Express, Visa and MasterCard, around 200K merchant locations including Whole Foods, Chevron, Nike, Macy’s, McDonald’s, Walgreens and CVS, among others. Apple Pay also launched with support from the 11 major issuing banks in the U.S., including Bank of America, Chase, Citi, Wells Fargo and Capital One, representing ~80 percent of payments volume in the U.S.
Since then, Discover announced it had reached an agreement with Apple to allow Discover’s cardholders to use Apple Pay for both the iPhone 6/iPhone 6 Plus and the Apple Watch starting sometime in the fall.
After enabling Apple Pay users to pay using Apple Pay at all of its stores on Apple Pay launch day, the $26 billion 4,600-store Rite Aid pharmacy chain yanked support from those stores Wednesday (Oct. 22), and CVS quickly followed suit, with no official explanation offered at the time. The culprit? Their deal with MCX and its mobile product, CurrentC, requires merchants to be true only to its mobile payments offer in store.
There’s nothing like talk of “fraud” to take the air out of the room, well, if you’re in payments and on the other end of the problem. That’s what happened when it was reported that crooks had found a back door into Apple Pay and reports starting flying everywhere about Apple’s fraud “problem” suggesting that crooks had hacked into Apple Pay.
But as MPD CEO Karen Webster wrote, “Apple Pay’s fraud problem isn’t because criminals hacked into existing Apple Pay user accounts, stole credentials and then shopped up a storm.”
“Apple Pay’s fraud ‘problem’ stemmed from account takeovers in which cybercriminals – very smart cybercriminals, I’ll add – used stolen card numbers to set up iTunes accounts, and then used those iTunes accounts to provision new Apple Pay accounts. And then shopped up a storm,” Webster wrote.
Fraud – yes. Hacking into Apple Pay – nope.
Apple Pay may have started in the U.S. but its ambition, as a global company, is to be a mobile payments method for anyone, anywhere with an iPhone capable of supporting it. Apple, of course, has its sights set on China, but it’s also looking to be accepted in two mobile payment-friendly regions: Latin America and Europe.
In February, it was reported Apple was looking to see how it could work with the Bank of Brazil, Bradesco, and Itaú to support Apple Pay. Apple would like to make its mark across Europe, but crazy low interchange has made the Apple Pay business model case a bit hard to make persuasive.
5. Apple Pay Becomes An Open Table Payment Option (plus more food options)
Mickey D’s isn’t the only place that iPhone 6 users can use Apple Pay to feed themselves. Consumers using the payment feature on Open Table can use Apple Pay to settle their check (if they have an iPhone 6 or 6 Plus). Integrating Apple Pay with Open Table achieves a payment experience for both sides of the app that eliminates one important source of friction in a restaurant – payments.
ChowNow, a mobile payments platform that enables ordering online, payment and pick up (or delivery) of food from a variety of food establishments (including restaurants that want to deliver) also enables Apple Pay for the restaurants it enables via its service. ChowNow CEO Chris Webb, tells PYMNTS that more than a third of the orders his restaurants take from iPhones are using Apple Pay.
For more on Apple Pay’s in-app performance, we’ve also broken down some stats.
Whole Foods claims to be Apple Pay’s leading retailer with 3.3 million transactions from the mobile payments app – a significant increase from Whole Foods’ 150,000 Apple Pay transactions it had processed by last year’s third-quarter earnings report.
“We were the first national supermarket to accept Apple Pay,” said Co-CEO John Mackey. “We are one of the top retailers in terms of number of transactions, and our seamless experience has been widely publicized.”
We’ll note that it all depends on where you are, too. Outside of the major tech hubs, when Whole Foods cashiers are asked how many people use Apple Pay, the responses vary. “One in 99,” said a cashier over the Memorial Day weekend at a store on the Coast outside of Boston.
Apple Pay’s biggest hurdle is no different than any other new mobile payments option: getting consumers to use it and use it often. Most people with iPhone 6’s who can pay with Apple Pay don’t, and most people who actually want to pay with Apple Pay forget to do so. Those are stats revealed in March 2015 from the research conducted by InfoScout and PYMNTS that highlights Apple Pay adoption and behavior.
The research concluded a few key things: both trial and adoption have gone up — but just not a huge amount. Apple Pay’s adoption picture has clearly improved some since November 2014 – as more potential users are hearing about it and trying it out. It also faces some primary challenges – those who can use it (have the right phone and are in the right stores), like it, but often forget about it – a problem that Apple is hoping EMV and terminal refreshes will help them overcome in store as more merchants are equipped to support it.
Apple Pay made a major pick-up in its quest to sign on more physical retailers – and one that comes as a particularly ominous sign for (still) yet-to-launch rival mobile wallet platform CurrentC.
Best Buy announced in April that it will start accepting Apple Pay later this year. The rollout has begun with Best Buy’s mobile app, which now takes Apple Pay – but that acceptance will carry over into physical stores later this year, once the chain has had time to update its checkout systems for NFC compatibility.
The fact that Best Buy is jumping ship to Apple Pay as soon as contractually possible could be an interesting sign of things to come. Best Buy was one of the founding members of MCX, the retailer consortium behind the CurrentC Wallet. Soon after the Best Buy news, it was announced that Home Depot has plans to officially accept Apple Pay at all its locations.
Tim Cook’s visit to China was all about a bigger Apple presence in China, including an effort to bring Apple Pay to China. Cook’s comments to Chinese news agency, Xinhua, certainly suggest Apple is making more headway in the country with China being responsible for the surge in iPhone 6 sales last quarter for Apple.
“We very much want to get Apple Pay in China,” Cook said during his visit in mid-May. “I’m very bullish on Apple Pay in China.”
Still, Cook’s vagueness in his remarks show that Apple hasn’t quite secured a deal in the one country the company has been fighting to be a bigger part of when it comes to mobile payments.
Stockholm-based mobile point of sale pioneer, iZettle, made news May 19 with the launch of its Card Reader Pro Contactless in Europe. This new hardware integrates its Chip and PIN card mobile reader solution with out of the box support for contactless payments – including Apple Pay.
And that, Jacob de Geer, iZettle’s CEO and co-founder, told MPD CEO Karen Webster, in a way makes payments history, too, for the small merchant that wants to be able to accept payments any way that consumers want to pay – first in the U.K., then Europe.
“The launch will make iZettle the first company of its kind to offer small businesses support for Apple Pay and contactless payments,” he said.
Will iZettle make its way to the U.S. with its reader and support for Apple Pay and EMV? Too soon to tell.
For additional news on Apple Pay, visit the PYMNTS.com Apple Pay Ecosystem.