Apple Pay at 1 year: Growing, but slowly

Ryan Faas

A year after its launch, Apple Pay has seen some significant growth in the U.S. and has now expanded to the UK. There are plans for additional launches in Canada and Australia later this year, and expansion into Spain, Singapore and Hong Kong in 2016 -- though only American Express has been identified as a partner in those markets.

The U.S. remains the primary market for Apple Pay, with all major card issuers and thousands of banks now supporting the platform. Even here, however, Apple Pay is far from ubiquitous.

Despite interest in the platform, only about 14% of US households have linked a card to Apple Pay, according to recent research from Phoenix Marketing International, up just a few percentage points from the 11% the company reported at the beginning of 2015. Phoenix Marketing International also notes that while Apple Pay users are keen on using it to make purchases, nearly half said that they'd encountered stores where they weren't able to do so.

Although Apple has done a fairly good job getting major retail and restaurant chains on board with Apple Pay, it'll be a while before any Apple Pay user will feel comfortable leaving the house to go shopping without a wallet. Apple's growing list of retail partners represents a smart starting point, but the reality is that shopping at large chains represents only a fraction of retail encounters.

Small businesses and Apple Pay

Small businesses and regional chains make up a significant number of purchases -- and a great many are unlikely to ever find themselves listed on Apple's website. They are also far less likely to have Apple directly marketing the service to them as a payment option. That puts the burden of spreading information about Apple Pay's availability to merchants themselves, who will need to investigate options, or on credit card processing firms.

One smart move Apple made in launching Apple Pay in the US involved the timing. To encourage adoption of more secure EMV chip cards, the credit card industry recently pushed ahead with a liability shift that places the burden of fraud onto merchants that haven't upgraded their processing terminals to accept the new cards, which are common in most other countries. Timing the Apple Pay launch ahead of that move means merchants upgrading their in-store hardware can choose a terminal that supports chip cards and NFC-based payment technologies like Apple Pay (and the more recent Android Pay). That makes the upgrade less burdensome, and more likely, than if merchants were asked to do so just so they could accept Apple Pay.

One business that made that choice recently is Crush and Cask Wine and Spirits in Saratoga Springs, N.Y., where I recently spied an Apple Pay sticker hanging just below the one listing the credit cards accepted. I had the distinction of using my Apple Watch to make the store's first Apple Pay sale.

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