Apple Pay is showing signs that it could be a flop
Apple Pay debuted with a lot of fanfare last year, but according to various recent reports consumers are not too excited about the technology, which lets shoppers at retail store checkout counters pay for goods with their iPhones.
The latest data from the shopping research firm InfoScout suggests that use of Apple Pay may actually be decreasing, adding to concerns that Apple Pay could end up being a flop.
Over the Black Friday weekend, only 2.7% of the people who were in a situation to buy with Apple Pay actually used the service, which is a drop from the previous year's usage rate of 4.6%, according to the report. That's nearly a 41% decrease from last year's Black Friday, a disappointing figure given the fact that Apple has been aggressively expanding Apple Pay's availability over the past year.
The report noted that the drop could be due to a larger base pool of people using the iPhone 6 compared to last year, when the research was done shortly after the phone launched. Also, the research was done only relying on 300,000 people who submitted actual copies of their payment receipts, meaning it may not be representative of the whole country.
"This is perplexing, considering Apple Pay has been widely available for over a year," BI Intelligence said in its own report about the InfoScout study.
A solution looking for a problem?
InfoScout noted that consumers are still relying on regular credit and debit cards, with 79% of iPhone users and 74% of Android users opting to pay with plastic instead.
In fact, this has been a major question mark for Apple Pay and other mobile payment solutions since they first debuted. Despite its convenience, mobile payment solutions never really presented a big enough improvement in the payment experience, especially since swiping a credit card wasn't much of an inconvenience to begin with.
Peter Thiel, the cofounder of PayPal, told us in a previous interview that this could be the biggest obstacle for services like Apple Pay.
"For a new payment product, you always have to ask, how much better is it than the current solution? So when we started Paypal, for eBay micro merchants, it was much better than getting the 7 to 10 days process of cashing a check in the mail," Thiel said.
"Apple Pay may be an incremental improvement, maybe a little bit better. But when you have something that's pretty good and you go to something that's perfect, sometimes it's very hard to drive adoption because the delta is not that big," he said.
It may be worth noting Apple Pay is less than two years old, and the overall mobile payment space is in its early stages. eMarketer recently said the transaction volume of mobile payments will triple by next year, while a survey by the Auriemma Consulting Group showed a 98% satisfaction rate from Apple Pay users. But that still doesn't fully answer questions around its mainstream adoption rate.
Apple declined to respond to this article.