Apple Pay Meets Its Biggest Foe Yet: Consumer Apathy

It’s been said that there are three kinds of lies: lies, damned lies and statistics. In the world of corporate communications, it can be difficult to separate that last one from the first two, and when it comes to Apple Pay adoption numbers, one figure that seems to indicate promising growth may actually be hiding a nasty little secret.

What could that be? According to the most recent PYMNTS/InfoScout Apple Pay Adoption Tracker, first presented at PYMNTS’ Innovation Project 2016, more consumers are giving Apple Pay a try, but even more aren’t coming back.

Data Doesn’t Lie

The beginning and end of the good news for Apple is that more consumers are giving its payments app a shot. Compared to just 16.6 percent of consumers indicating that they’d tried Apple Pay in Oct. 2015, 23 percent said the same as of March 15. While that 6.4 percent increase sounds amazing, it is a little misleading to say that Apple Pay as a payments platform is thriving. After all, first-time users might be a fine demographic for a mobile game or other apps that rely on novelty, but is Apple Pay convincing users that it’s worth using again and again?

The data resoundingly says no. Among eligible transactions — consumers with the right phones and in stores with the right POS equipment — Apple Pay saw a 24 percent nosedive compared to last quarter. Young children should be removed from the room for this next data point: Apple Pay’s year-to-year eligible use figure is down a whopping 41 percent.

More users but fewer repeat ones should sound alarm bells all around Cupertino. If consumers are seeing Apple Pay as a mere novelty, then that “newness” factor will inevitably fade. For some shoppers, like the 21 percent who said they simply “forgot” to use Apple Pay when paying for their last transactions, it looks like it already has. For others, Apple Pay seems to actually be driving them back toward cash and card payments. Forty-six percent of iPhone users surveyed said that they were “satisfied with their current payment methods,” which is almost a 10 point increase over Oct. 2015.

In some ways, those figures should be even more troubling for Apple than the 22 percent who said they were “worried about security” or the 26 percent who confessed they weren’t sure “how mobile payments work.” Those consumers have yet to make up their minds on Apple Pay. The others have given it a fair chance and found it wanting.

Prescient Predictions On Apple Pay

It’s easy to think of Android Pay, Samsung Pay and the dozens of other digital wallets that are released each month as Apple Pay’s biggest rivals. However, the fact that consumers are going back to their original payment methods, even after seeing what Apple Pay has to offer, could point to a fact that experts were discussing way back when the platform launched in 2014: Does Apple Pay improve enough upon the average checkout experience?

MPD CEO Karen Webster touched on this issue a month before Apple Pay launched in Oct. 2014.

“Everyone is convinced that Apple Pay will break the mobile payments logjam and accelerate the move to mobile payments because, well, it’s Apple and they’ve had time to watch mobile payments evolve (or not) over the last four years,” Webster wrote. “But we all know that anything in payments takes twice as long and is 10 times harder than originally planned.”

Two years later, it seems like this scenario is playing out. Few would dismiss Apple Pay’s achievements thus far, but the runaway payments freight train that it was hyped as has turned out to be a modest passenger trolley at best. Regardless of how long the process takes, as Webster noted, it’s also worth identifying when the market is ready to accept and incorporate mobile payments. As is maybe too obvious now, there were clear concerns before launch day that perhaps consumers weren’t quite clamoring for a new way to check out as much as Apple was clamoring for them to want it.

Bill Ready, now-SVP and global head of product and engineering for PayPal, shared similar thoughts in a Sept. 2014 interview with PYMNTS, in which he wondered aloud whether the foundational act of using a phone instead of cash or a card had a place in the checkout process at all.

“I think NFC, for a long time, has been a technology in search of a problem,” Ready told Webster. “The card swipe isn’t hard to do; it’s one of the easiest things to do. Saying that now Apple Pay will spark adoption – well, while certainly Apple is a major player that can shift the ecosystem, but the bigger issue is whether there is a major pain point for the consumer when they swipe their card.”

This might be the primary through-line in Apple Pay’s two-year journey to establish a foundation of shoppers who use it religiously. While paying with an iPhone might very well be faster and more convenient on paper than cash or cards, real-world consumers still aren’t seeing a reason in 2016 to give up their physical payment methods. Some don’t care to change, and some don’t like the options available to them. Whatever the reason, it’s a major obstacle that Apple Pay can’t afford to ignore, especially in the face of current statistics.

Future Fixes

Convincing consumers that, no, Apple Pay really is what they want after all is a marathon, not a sprint. In fact, any more of a marketing push about how convenient and trendy paying with an iPhone is might turn off a greater number of shoppers who’ve already shown a statistically significant degree of apathy toward the payments platform. It’s up to the ad executives to figure out whether a light touch or media blitz can overcome the inertia of cash and cards that looks to be holding Apple Pay’s habitual users back, but for now, it looks like Apple is going the discount route.

Of the many announcements made by CEO Tim Cook at Apple’s March 21 press conference, the only one with an outside chance of boosting Apple Pay adoption was the price drop on the base model of the Apple Watch. Previously $349, the NFC-enabled, Apple Pay-compatible smartwatch will retail for $299.

Will that send consumers running to Apple Stores with three crisp hundreds tucked into their fists? Certainly not, since that still makes Apple Pay all about checkout in the store — an experience that consumers don’t think is broken, unless they are asked to use a mobile wallet to do so.

App- and smartwatch-based payments aren’t the end of the line for Apple, though. Rumors are swirling about imminent moves to incorporate mobile Web payments into the Apple Pay ecosystem, but again, this isn’t a silver bullet. At best, it’s a move toward diversification. If consumers don’t want to download the app, they can use browsers or wearables; if they loathe smartwatches, hey, look, there are multiple ways to pay with their phones. It’s the thousand-mile journey to improve mobile payments that Webster warned everyone about in 2014, and sometimes, the advances can seem so granular that they don’t look like progress at all.

But Apple can’t afford to stop trying to widen its payments net. Consumers looking for a switch have more choices than just Apple Pay, and more are coming to market every day.