Apple Pay went off to a roaring start almost 18-months ago. In the first 72 hours there were more than a million cards activated with Apple Pay in the US. That's a huge uptake from a card enablement scheme. At that point they became the largest initiative launched in the US so far. Apple Pay has been on quite a journey since then. Not only can you use it for physical in-store purchases, but you can also use it to make purchases online. You now have the ability to use Apple Pay right on an iPhone/iPad to make in-app purchases or request an Uber.
In the early stages Apple Pay accounted for two out of every three dollars of EMV transactions in the US. Since then, there's been a rapid geographical expansion to capture markets around the world. Apple Pay has already rolled out across the UK, Canada, and in Australia with support for American Express. Early next year it's going to Spain, Hong Kong, and Singapore. Of course, not all of these regions are equal playing fields—they all have their own dynamics.
Steady Growth Ahead
A month after Apple Pay launched, there were some surveys that showed that 9% of users who owned an Apple Pay capable phone had actually used Apple Pay. The most recent survey from October shows that metric is up to 16.6%. While Apple Pay isn't for every iPhone user, there's clearly a growing acceptance and usage of the feature.
The ability to make contactless payments isn't going to be inhibited by the end user's device. For that reason, I think we're going to see a much bigger uptick in terms of customer adoption. In the US only 27% of merchants are capable of taking an EMV transaction. Compare that to markets like the UK where EMV is already the standard for transactions under £20. EMV is also the standard in Australia for transactions under $100 AUD.
Apple hasn't been alone on their journey. They've brought competitors like Google and Softcard along for the ride. (Google's retiring of Google Wallet is a topic worth going in-depth on another blog post.) Apple brought payment tokenization to the next level by not just allowing users to store their credit card information. It also gave end users a payment method that's more secure than the card in their wallets. Every payment is tokenized with a unique transaction number. If someone loses their iPhone, the device can simply be wiped remotely.
Changing the Payments Landscape
By launching Apple Pay in the US, Apple brought contactless payments to a market that was in the infant stages of contactless EMV rollout. (At launch, there were very few cards able to perform contactless payments.) The US still has the lowest percentage of contactless EMV point of sale devices when it comes to any of the first world countries. Apple Pay was revolutionary in the US because it changed both the customer and the merchant's paradigm about how transactions could take place.
What about other markets that have had contactless EMV for several years? In those regions, Apple Pay becomes an alternative to carrying all your credit cards around. It's more secure and potentially more convenient. In my own experience, it's ridiculously easy to simply double-tap my Apple Watch and wave my wrist over a point of sale device. It's way nicer than reaching for my wallet, pulling out my card, and handing it over to someone else (or sticking it in a machine). If you don't have an Apple Watch, you can just grab your phone and double-tap the Touch ID sensor. Apple really nailed the user experience.
Another great element of Apple Pay in markets that are used to contactless payments (like the UK) is that you can use it for public transport. London has traditionally used the Oyster card for riding the tube, the overground, and some airlines. They expanded their offering so that you could just tap your credit card and get billed for the difference. With Apple Pay, now you can simply walk up with your watch/phone, tap, and keep going. (The one gotcha you have to be careful about is if you have both an iPhone and Apple Watch. You need to make sure you tap the same device each time. Otherwise, you'll be using two separately tokenized cards.)
