Why Don’t More Consumers Use Apple’s Passbook?

Although it’s widely known that Apple Passbook is an area that very few shoppers have bothered with yet, what is less clear is why and whether Apple Pay’s repeated use of Passbook is going to motivate shoppers to try it directly. A report from Flagship Research reported on eMarketer recently poured into what consumers are using Passbook for, hoping that such a report might yield clues about how to get consumers to use it a lot more.

Among that report’s findings were that a majority of people using Passbook use it for coupons. The breakdown of stats shows that nearly 25 percent of U.S. mobile device users had used Passbook within six months of the survey, of which 48 percent of those were iPhone users with 56.1 percent of those with tablets having an iPad. Of the four options respondents reported using Passbook, coupons was the highest answer at 68.5 percent. Airline  boarding passes came in at 46.7 percent, payment information at 44.6 percent, and movie tickets at 35.9 percent.

Looking at age brackets who most likely to use Passbook could provide insight into who the marketers of digital wallets should be targeting. Data in the report showed that those most likely to use passbook were in the 25-34 age bracket, which comprised of 37.7 percent of users. What the figures reveal is that the population most tuned into their smartphones, young millennials, aren’t likely to use Passbook. Adults age 45-45 registered 30.1 percent, and the young millennials category (18-24) only recorded 15.6 percent of users saying they’ve used Passbook recently. The percentages dropped with age as the 46-55 age group reported 18.8 percent of users and the 56-65 age bracket recorded just 8.3 percent.

Passbook also isn’t being used as the top digital wallet, compared to the bigger players in the industry. Research from Thrive Analytics shows that 17 percent of U.S. consumers with smartphones had only used Passbook. This compares to 79 percent of users who had used PayPal and 40 percent who’d used Google Wallet. Although not many had used Passbook, 60 percent of those users reported using it on a weekly basis, compares with PayPal users at 40 percent and Google Wallet at 49 percent. The report also provided data toward what types of purchases people are making with digital wallets.

“Other critical study findings showed that the majority of digital wallet transactions are conducted on mobile devices (60 percent) and 3 out of 4 transactions under $10 are done weekly via a mobile phone. Typical products purchased with digital wallets include coffee/drinks, retail items, games and books, as well as groceries” the study concluded.

The majority of Passbook’s transactions were both split at 39 percent of users recording using Passbook for either a purchase under $10 or between $10-30. The remaining 22 percent of Passbook users typically spent more than $30 on a transaction. PayPal’s numbers showed most of its users staying between the $10-30 range (47 percent) with 22 percent of purchases being under $10 and 31 percent of transactions being more than $30.  Google Wallet users were also on the higher end of spending with 48 percent of transactions costing between $10-30 and 35 percent costing more than $30. Google Wallet users reported $17 percent of transactions being under $10.

The burgeoning digital wallet industry shows an attempt to address customer demand for wanting to go cash and potentially card free, though it’s clear consumers still aren’t turning to digital wallets for the main source of making everyday payments.

“An overwhelming majority of consumers acknowledge the presence of digital wallets, however a minority have actually used them despite fewer shoppers carrying cash today,” said Thrive Analytics managing partner Jason Peaslee in his company’s 2014 Digital Wallet Use study. “This paradox presents a vast opportunity for both digital wallet providers and retailers to educate consumers on the unique benefits of the digital wallet shopping experience.”

The study showed that usage of digital wallets remains less than one-third of those who have the capability to use one. The largest deterrent to that is security concerns, followed by 32 percent of survey respondents saying they don’t use mobile wallets because of the lack of usability versus a credit card or cash. This was followed by 32 percent of respondents who said they don’t think to use a mobile wallet at the time of purchase. The study also provides perspective on digital wallets consumers use, the products purchased with them and what consumers typically spend. Key findings also suggest that a good segment of consumers simply don’t think a digital wallet is an easier way to pay than cash, debit or credit cards.

“The 2014 Digital Wallet Usage Study revealed that despite nearly 80 percent of consumers being aware of digital wallets—including major players like PayPal, Google Wallet, Apple Passbook—security concerns remain the main barrier to adoption (46 percent), followed by lack of usability vs. credit cards/cash (37 percent) and not being top of mind as a form of payment at the time of purchase (32 percent).”

Demographics of who carries cash also matter, the study concluded. This includes looking into what age brackets and gender are more likely to carry cash. This also applies to digital wallet apps, and where people look to use discounts and coupons more.

“Key findings from the survey indicate consumers are carrying less cash today, especially on-the-go females, with 50 percent of all consumers carrying less than $20 on a regular basis. Of the survey respondents who carry no cash at all, three out of four are under the age of 40. Also, nearly 60 percent of all digital wallet users are male despite carrying more cash than females,” the study said. “Females (18-29) tend to use merchant digital wallet apps such as Target, Macy’s and Home Depot more often than males to look for discounts/coupons (72 percent) and price shop (56 percent). When males use merchant apps, they tend to browse and engage in service related activities like paying bills and looking up retailers’ product and contact information.”

While research points to what motivates people to use digital wallets and for what reason, convincing consumers to use those wallets is an entirely different industry issue. Data has also revealed insights of who and for what that digital wallet is likely to be used. But if consumers aren’t using them today, what will make them do so tomorrow? The launch of Apple Pay last week may give new life to Passbook, but only time will tell.