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Why Apple Pay usage appears to be lagging behind growth in retail acceptance, but Apple shouldn’t worry

A customer uses an Apple Inc. iPhone to pay via the Apple Pay system, from their Santander account, at the check-out till inside a Pret A Manger Ltd store in this arranged photograph in London, U.K., on Tuesday, July 14, 2015. Apple Inc. is making the U.K. the first market outside the U.S. for its digital-wallet system as the company fights for a place in the electronic-payments industry. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

While the number of U.S. retailers who accept Apple Pay has grown seven-fold between the launch of the service and the end of last year, usage appears to be lagging behind that curve. A survey by Phoenix Marketing found that even in the cases of retailers with the highest levels of Apple Pay usage, only a minority of customers use the payment method there more than once a month.

The survey also noted that 47% of Apple Pay users had experienced a failed transaction at least once, and that a handful of states account for half of all payments made using the service.

As someone who lives in the UK, where contactless payment first launched in 2008, none of this surprises me – and I don’t think it’s anything for Apple to worry about …

As an early adopter of new technology, I was keen to take advantage of contactless payment, but I’ve experienced four barriers along the way, most of which are playing their part in Apple Pay usage rates today.

First, your bank needs to support the service. In the UK, Barclays was the first to offer a contactless card, but changing banks is a hassle, so I ended up waiting until 2012 for my own bank to provide them. Many Apple Pay users have likewise had to wait for their own bank to support the service.

Second, many retailers still don’t accept Apple Pay – and third, when they do, most have transaction limits. Both factors mean that we haven’t yet reached the point where we can simply leave our physical wallet at home and use our iPhone/Watch for all purchases. Until we reach that point, the habit of reaching for our wallet is going to play a significant role.

Finally, it isn’t always clear whether or not a retailer accepts contactless payment. While they should display the contactless symbol or Apple Pay logo at the payment terminal, not all do. Where we’re not sure, it’s less hassle to simply use another form of payment than it is to risk a failure or to ask an assistant who may or may not know.

That ‘handful of states’ is also no surprise: that too is similar in the UK. Today, there are few retailers in London – even corner shops – who don’t support contactless payment, but it’s still a different story in other parts of the country. Again, until we can be confident that most retailers support it, it’s easiest to use other payment methods.

The story here, I think, is that Apple Pay usage will mirror that of contactless cards: a relatively slow burn until we reach the tipping point where most retailers accept it. Once acceptance is near-universal, and retailers finally realize the strong security means they can lose the transaction limits, many of us are likely to use Apple Pay for almost every transaction.

Via ArsTechnica. Photo Chris Ratcliffe/Bloomberg.

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Comments

  1. Michael Mazal - 8 years ago

    I use it… Buuuuut, its sometimes hard to determine if a location accepts it and I feel like a tool asking when I can just pull out a credit card.

    • crichton007 - 8 years ago

      I don’t mind asking but I have a heck of a time finding places that accept it (or any other wireless payment options). The grocery store used to but posted a sign they don’t accept any wireless payment options any more. McDonalds does but I’ve found the hardware there less than reliable. The local movie theater accepts it… Beyond that I haven’t found any other places that I shop at that accept wireless payments at all. My concern is that I’ll stop thinking about it and forget to ask.

    • yojimbo007 - 8 years ago

      Interesting this article showed up today. Just last night, After stoping at a few location(Trader Joes, My local hobbystore, and Ritaid)… I took for granted that i did not touch my wallet once!

      All transaction were done through my Watch and ApplePay. Not only i love it …. Everyone observing the transactions always mames a cool comment ! They love it too.

      I can say that at locations where i shop.. From big chains to mom and pop stores… over 60% of my transactions are now done on Apple Pay .

      Six months ago or so i was still begging apple to increase merchants and exposure of those merchants.
      But now … I use apple pay more than my other payment methods in Brick and Mortsr stores.
      Online i have not seen anyone offer it yet… Other than apple itself .
      There Paypal dominates for now ..
      Hope apple puts major effeort there too.

      But applepays overall availibilty has been exponentially increasing in the recent few months !
      Im happy.
      I want to see it fully implemented at gas stations now !

  2. Grayson Mixon - 8 years ago

    The main issue is exactly what you pointed out. Most stores that accept Apple Pay don’t advertise it, and the store employees have no clue.

    I completely surprised an employee at Best Buy when I used Apple Pay. They asked a few others employees if they knew about Apple Pay, and none of them knew they accepted it. And Best Buy sells iPhones.

    Some, but apparently not all, Subway locations accept Apple Pay. Same deal there when it worked, except that at a location that didn’t accept Apple Pay, they didn’t even know what Apple Pay was. I told them that I had used it at another Subway location, and they said they must not accept it at all locations, because they had never seen it, heard of it, and if it didn’t work when I tried it, they must not take it there.

    If store employees were properly trained on what Apple Pay is, and if stores that accepted Apple Pay actually had a sign, or a sticker, or a commemorative t-shirt, or something, indicating that they accept it, it would go a long way toward improving usage.

    • Ben Lovejoy - 8 years ago

      Yes, I suspect owned vs franchise is an issue with some chains.

    • bellevueboy - 8 years ago

      So true. Now a days I just use it by default and the employees are just awed by how cool it is. Also I have found it available for use in many restaurants especially when I do take outs.

  3. Robert - 8 years ago

    I’m still waiting for my Credit card company (here in the US) to support Apple Pay. My bank supports it, but in my case I need to physically go down to my bank to get it set up and I rarely use my bank card so I haven’t done so yet.

  4. John Smith - 8 years ago

    I’m now using it daily to pay for car parking at work – massively better compared with having to find pound coins every day.

    Using it 2-3 times per week in shops, cafes etc. Almost always for small amounts using the standard terminals that would take a contactless card. Using around the university where I work is brilliant as I can buy small things like drinks or food without having to carry my wallet – I always have my iPhone and everywhere on campus takes it since the demand is there from the students.

    Presumably apple strategy is looking at this in phases – first get the banks to support it, then the merchants, then the people will follow. I can see how all of this is ‘chicken and egg’ – people won’t use it if stores don’t accept it, but stores won’t install new systems if people aren’t using it etc etc.

    Looking forward to the day when the full apple pay – no £30 limit – is commonly available.

    I agree – both the ordinary contactless and the full apple pay need more signs in the stores to avoid people feeling awkward about asking. Maybe something apple could work on ?

  5. retrogeekukblog - 8 years ago

    I too am in the UK and love using Apple Pay. The fact my credit card offers an additional 3% through February 2016 sweetens the deal.

    I have encountered a few issues (for example the terminal takes a few goes to recognise my iPhone) but the biggest bugbear is acceptance.

    Out of the supermarkets I visit only two of them have a contactless reader. One of them is a small one in the city centre (meaning a food shop isn’t ideal unless I fancy carrying heavy bags around) and the other is nearer but capped at £30.

    Until retailers realise it’s much more secure than a physical card and the way forward it’s going to take some time for people to sit up and notice.

    Plus there are banks and building societies that offer contactless cards but aren’t an Apple Pay partner. That needs to change.

  6. Lawrence Krupp - 8 years ago

    I bought some groceries last night using my Watch at a regional grocery chain. The checkout clerk made a comment that she was amazed every time she saw someone use their phone or watch to pay. There was no one in line behind me so I asked her how often she sees customers doing this. Her response was, “A lot more since Christmas.” I think that bodes well for the service but it’s going to be a long time before we can leave our wallets home.

  7. checker92 - 8 years ago

    I would love to at least try it. But unfortunately Apple decided to not make it available in Germany. (Until now)

    • fdpdk - 8 years ago

      And the same here in Denmark, i guess the Bank´s are really scared to loose out on their own creditcards.

    • rnc - 8 years ago

      I think in the EU, only UK has it.

      Tim Cook says Spain will have in 2016, maybe some other countries will be included too.

      Here in Portugal, we have already lots of NFC-equiped terminals and one single identity deals with all banks and all credit card companies.

    • olivertwist78 - 8 years ago

      Pay does work here in Germany since the day one (October 2014) even though it is not officially introduced here. What surprised me the most is how many retailers accept Pay even though they aren’t aware of it. That includes ALDI Süd (notorious for resisting MasterCard and Visa until recent upgrade to new NFC-enabled card readers). Pay works at all of Starbucks Deutschland stores since October 2014: in fact, my first ever Pay transaction took place at Starbucks store on Leopoldstraße in Munich.

      So far, Pay works at ALDI Süd, Kaiser’s Tengelmann, EDEKA, Starbucks, Galeria Kaufhof, MyMuesli, Denn’s Bio, Basic Bio Supermarkt, Conrad Electronic, many apothecaries, MyIndigo restaurants, McDonalds, and so forth.

      My biggest peeve is the attitude of some German cashiers. They insist handing them our credit or debit cards so they could swipe or insert the cards themselves. I tell them their readers are enabled for contactless payment, but they refuse to initiate the readers unless I hand them my card. I have complained to the management every time it happens, yet the customer service seems to be low priority in Germany unfortunately.

      Another peeve of mine is seeing “Systemfehler” (system error) at some stores, namely REWE, Karstadt, Saturn, and LIDL, even though contactless payment is enabled. I get song-and-dance routine every time I wrote to those retailers. One insisted on Pay “not being officially introduced in Germany yet” as a lame excuse. REWE fumbled through the gaffe in the German media when a YouTube video of successful Pay transaction at REWE was posted in January 2015. After reintroducing the contactless payment at REWE last December, Pay is still blocked.

      https://www.youtube.com/watch?v=5Jv6tDbNUBw

      Whenever I get the “Systemfehler”, I would look up in my bank account and find the transactions successfully completed. It means I have to wait three to seven days for the transactions to be voided and fund returned. Every time I wrote to those retailers, they would get all defensive and blame my bank for the mistakes. God, how stupid they are!

      In spite of those peeves, the best part was seeing the excited reaction amongst cashiers when seeing the Pay transaction for the first time. On the subsequent visits, the cashiers would sometimes call other co-workers to witness the technological miracle. Not to mention how convenient it is to use Pay in lieu of physically handling debit card and entering the PIN or signing the receipt.

  8. iSRS - 8 years ago

    Here in Northern Massachusetts/Southern NH it is still only a handful of national chains. Some that look like they should still don’t. Not only that, but many places that got new terminals not only turned off contactless pay readers, but the chip readers. They have all said it was taking too long, and they didn’t want to deal with it at Christmas time. While I can understand that, it speaks to larger issue. Places that we shop have little incentive to support any new technology. They can “upgrade” their systems to check a box, but don’t have to support it.

    • gkbrown - 8 years ago

      I live just north of Boston and see pretty much the same thing. The only places I know of that reliably accept Apple Pay are Staples and Whole Foods (two places I shop at occasionally, but not often). I see more vending machines offering Apple Pay support than actual stores!

    • BFSEsq - 8 years ago

      Agreed… I’m in Michigan and I see so many chains that have the readers installed for chip cards, but they haven’t been enabled. For months, retailers have had these non-functional chip readers. There’s no real incentive. In the US, where the banks have free reign, there’s just no fast change when it comes to payment systems. The only place I’ve found that has functional chip readers is Target. When it comes to Apple Pay, I don’t even try. I just don’t want to be a tool that holds up the line when I’m supposedly doing something to “save time.” Until it’s more commonplace, it’s still just easier to pull out your wallet.

  9. The big “liability shift” in October in the United States was supposed to prompt many retailers into getting EMV chip-card readers, which in turn would most likely include NFC (incl. Apple Pay support). That hasn’t happened. Instead, most retailers (like the Safeway store I shop at weekly) it seems are keeping their old swipe-only machines, and just being extra-annoying and asking “I need to see your card” to confirm the last 4 digits – the a cheap and dirty version of card verification security.

    Even more obnoxiously, many retailers seems to HAVE NFC readers, but when I discreetly hold up my phone to the machine, right in front of the little NFC logo, nothing happens. If I ask, they say, “Oh, those don’t work / we turned them off”. One place I’m forced to frequent (a food court near my office) even taped-over both the EMV card slot and covered-over the NFC logo, and instead does the whole “let me see your card” routine.

    At this point, over a year after Apple Pay was rolled out, even with all three of my primary payment cards available, I’m pretty much limited to using it at a drink vending machine in my office building.

    • AZKaren (@azkarenvan) - 8 years ago

      I have been using Apple Pay at Jewel Osco since fall of 2014. They are now owned by Albertsons, who also own Safeway now. All of their stores are now asking for the Apple Pay device account number when a customer uses Apple Pay. This is ridiculous! Last time I was in Jewel the cashier made me show her my phone so she could verify the device account number! I called their corporate offices and was told they are doing this until they have their chip readers activated. They don’t even understand how Apple Pay works and why it is already more secure than the chip readers. Even if someone stole my phone, a person would have to hack the biometric fingerprint lock! If they can already hack my fingerprint, then they already have access to the Device Account Number. It’s pure idiocy.

      I also use Apple Pay at Fresh Market and there are no signs telling customers it’s available. The cashiers don’t even know they take it. They are always surprised when I use it and wonder what that “beep” was. The Jewel Osco cashiers don’t even know what Apple Pay is. They’re just required to ask for the DAN or the last 4 digits of plastic cards. Hopefully they’ll have their chip card readers working soon, and this will stop!

  10. g0bez - 8 years ago

    My phone picks it up easily enough that I can just wave it quickly and I know pretty easily. I really love the convenience of it and stores in my area are adopting it frequently enough that I find myself trying it first, even if I don’t see the logo. Plus, with the new chips in the credit cards (and places all over the map with implementation), it is easier to bypass that whole chip-or-no-chip-or-yes-chip-but-it-is-not-enabled-yet-so-still-swipe game.

    It is not always the seamless experience that is advertised… my issues have been:

    1. A number of places still make me sign (perhaps over a certain dollar amount?)… this is really annoying in a First World Problem kind of way.

    2. My grocery store requires me to pull up the last 4 digits of my device ID as a verification, which they must punch in before the transaction will clear. This is for any charge over $50, which also happens to be their signature threshold for credit cards (and they apparently don’t trust TouchID yet), so I get to pull up my 4-digit ID (which I now have memorized) AND sign. What is the point of Touch ID if I have to jump through those hoops?

    3. It is still new enough that at least 70% of the time I get a comment like “Oh, wait – did you just pay with your phone?” or “Did that actually work?” or “Oh I’m sorry we don’t acce…. uh, well I guess it went through! I had no idea…”. If there is no line behind me I can usually count on a bit more conversation around what it is and how it works. It is only annoying when I have a screaming toddler with me, or someplace to be… not a deal-breaker, but when I’m in a rush and don’t want to risk it, I break out the traditional plastic.

    None of those are deal breakers for me… and I really want these pain points to get better out there, so using it shows that there is demand (which presumably will help keep pushing it forward).

  11. Jack Stevens - 8 years ago

    So far in the UK I have used apple pay everywhere that contactless is accepted, regardless of whether they say that Apple Pay is. I have not found any contactless units that don’t accept my phone as a method of payment. I’m not saying they don’t exist, it’s just that even if shop assistants don’t know if apple pay is accepted, or the sign isn’t visible, I bet it will still work with contactless units.

    It’s been an absolute godsend for using AMEX, which isn’t accepted in loads of places in the UK, but using Apple Pay with that card attached IS! I rarely take my wallet out of my bag anymore and when it comes around to Apple Watch 2 I bet I’ll use Apple pay on that a lot too!

    • Ben Lovejoy - 8 years ago

      Yep, a contactless terminal should neither know nor care whether you are using a card or a pseudo-card on Apple Pay.

  12. BLURLABS (@blurlabs) - 8 years ago

    Use it and love it – more more

  13. Was at a Subway yesterday and after I handed my debit card I noticed the logo on the LCD of the payment machine. Apple needs to incentivize small business. Give them a 1% rebate and this thing would seriously take off.

    My wife’s small business received their new Paypal and Chip enabled Square reader yesterday. She is so stoked. Apple Pay and Square Accepted Here stickers are on her front window and at POS. Doing all we can ;)

  14. taoprophet420 - 8 years ago

    Loyalty rewards and store cards being supported and not advertised is also a major factor holding back Apple Pay.

  15. DarkMx2000 - 8 years ago

    Well I was happy to hear at work yesterday (Starbucks) that they are sending out the new units the accept Apple Pay and chip readers. I hate the new chips in the debit/credit cards but a lot of people have been waiting for Apple Pay to come around including me 😊

    • olivertwist78 - 8 years ago

      Interesting…

      Starbucks stores in Austria and Germany have accepted Pay since the day one (October 2014) even though Pay wasn’t (and still is not) officially introduced in both countries. In fact, my first ever Pay transaction took place at Starbucks store on Leopoldstraße in Munich. I suspect Starbucks Germany last year had upgraded the problematic credit card readers to the improved ones, which has NFC function installed and enabled.

      A funny story: a guy was so proud of using his iPhone 6 to pay for his drinks that he had installed Starbucks app. However, he struggled through the app to authorise the payment through QR code. I looked at him then tapped my iPhone 6 on the credit card reader, which rapidly completed the Pay transaction. He gawked with his jaws dropped and his eyes pressed out as far as physically possible. A barista and I glanced at each other then burst out in loud laughter, embarrassing him. Poor guy!

  16. rymc02 - 8 years ago

    I hope this becomes more acceptable. I feel like a douche as it is pulling out my phone to pay but I feel like an even bigger douche when it doesn’t work somewhere.

    Can we talk for a minute about how slow chip and pin is, it’s like going back to the days of dial up modem again. And most retailers don’t tell you if they are set up for chip and pin. Half the time I swipe and then the employee tells me to insert or I insert and the employee tells me they are not set up for chip and pin yet.

    Payments are currently a cluster**k in the US right now and only to be made worse by Walmart, Target and other big name stores all releasing their own payment apps.

    • BFSEsq - 8 years ago

      The US is a disaster for payments, and it apparently isn’t getting better anytime soon. It does take longer for the chip payment to work. I suppose that wouldn’t be a big deal if it actually provided more security. But it doesn’t. We didn’t actually adopt the European system of chip-and-PIN. We adopted a weird, half-assed version where you can still sign after scanning the chip instead of needing a PIN. The PIN is the main security feature.

      • Ben Lovejoy - 8 years ago

        Yeah, chip-and-scrawl-nobody-ever-checks does seem a weird decision.

    • PJ - 8 years ago

      I find it funny how Chip&Pin leaves the right side of the card dangling out of the reader so the last 4 digits are visible. I’ve stood behind a few women at grocery stores that insert there card and just leave it in while the cashier is scanning groceries. With AMEX cards the security code is going to be visible as well since it is printed on the front.

  17. How do they track it?
    The tokenizer protocol is designed solely so no one could track. And Apple Pay didn’t send any specialized data to the payment terminal.
    So the only way they could know is: by Apple (which is unlikely), the banking institution (which is hard because they don’t public data), and user self-report (which is highly inaccurate)

  18. Around here it’s just starting to take off. My grocer now offers it. My drugstore now offers it. And, some of the more esoteric places have it. Unfortunately, many retailers aren’t on board yet.

    One thing to remember: The retailer gets to determine how much friction is in each transaction. So, while my grocer accepts ApplePay and actively promotes it, the reader still requires you to choose Debit/Credit every time you use ApplePay.

    Slow and sure I say (makes me spend less:-) )

    • Ben Lovejoy - 8 years ago

      Yeah, that debit/credit selection thing is peculiarly American, I think. Confusingly for Brits, we have to pretend our debit cards are credit cards when we use them in the USA.

      • BFSEsq - 8 years ago

        It’s very American, because it’s essentially a question of, did you want to type in your PIN? Or do you want to avoid typing a PIN and have no security at all? It’s ridiculous, but it’s how our system works.

        Sure, if you don’t enter a PIN, you have to sign, but that’s a completely pointless step that does nothing for security. It’s not like anyone checks the signatures.

      • Ben Lovejoy - 8 years ago

        Or even whether the card name matches the gender of the person presenting it …

  19. Inaba-kun (@Inaba_kun) - 8 years ago

    We’re a long way from leave your wallet at home territory. Most shops don’t have contactless, let alone Apple Pay, and of those that do have Apple Pay they still have the same low transaction cap as contactless anyway. It’s a damp squib.

    Perhaps the day will come eventually when I can leave my wallet at home, but I doubt that will come to pass for 5 years at least. Heck I can’t even do a weekly supermarket shop with Apple Pay at ANY supermarket right now.

    • Ben Lovejoy - 8 years ago

      I can in theory leave my wallet at home a lot of the time when I don’t expect to spend more than £30 ($50) in any one transaction, but in practice the uncertainty factor means that I don’t.

  20. standardpull - 8 years ago

    I find that many people are confused regarding Apple Pay. They don’t quite understand that they have to set up some kind of payment system (like a credit card) inside Apple Pay for it to work.

    Couple that with US retailers, who are themselves a confused mess. Mag stripes, chip cards, and new weirdo payment systems really don’t help. Even big-name retailers are all over the map. All retailers and the card industry get a “D” this semester for their very lousy approach.

  21. jerenyun - 8 years ago

    Interestingly enough, the place I’ve had the most issues with Apple Pay is at the Apple retail store itself. The issues seemed to stem from my card declining the purchase, thinking it was a fraudulent attempt.

  22. PJ - 8 years ago

    I use it every time I go to McDonalds or Walgreens and would gladly use it everywhere else. The problem is those are the only two places near me that accept Apple Pay which I go to. My wishlist would be: Wendy’s, KFC, Jewel-Osco (supposedly coming?), Target (supposedly coming?), and Arby’s. There was a White Castle near me that had the Apple Pay sticker on their register but they kept the scanner near them and I didn’t feel like bothering them to turn it around (they were awful people and that location got shut down by the owners).

  23. Tony Myers (@Chewboxa) - 8 years ago

    My issue with apple pay is that it is not accepted at least 85% of businesses.

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Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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