We Tried Apple Pay At A Bunch Of Major Retailers In One Of New York's Busiest Shopping Areas - Here's What We Found

BI IntelligenceThe Apple Pay set-up process.

Apple Pay launched earlier this week on iPhone 6 devices as part of the iOS 8.1 update. Three members of the BI Intelligence team tested out Apple Pay at 11 major retailers around Union Square in Manhattan on launch day.

We used an iPhone 6 and linked both a Chase and Bank of America credit card to the system.

We had five main findings:

1. Set-up was easy and seamless.
2. Retail employees were uninformed about Apple Pay, which may slow adoption (cashiers and shop clerks won't be able to help along or encourage reluctant or confused potential users).
3. Apple Pay does make shopping easier and worry-free. It requires fewer steps than cash or credit for in-store shopping, while at the same time feeling more secure.
4. Trying to complete a refund with Apple Pay was difficult.
5. In-app purchase options were limited.

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1. THE SET-UP PROCESS WAS EASY AND SEAMLESS

Users first have to download the iOS 8.1 update, and after that's completed, users have to open up the Passbook app to find the Apple Pay setup link. The instructions were clear and simple. (See image, at the top of this note.)

2. RETAIL EMPLOYEES WERE UNINFORMED ABOUT APPLE PAY, BUT THE SYSTEM IS SIMPLE ENOUGH THAT WE WERE STILL ABLE TO USE IT TO BUY THINGS

We visited 11 brick-and-mortar retailers that have been mentioned in the press or on the Apple Pay site as partners. We did so in one of Manhattan's busiest commercial districts, Union Square. At eight of these retailers, store clerks did not know whether they accepted Apple Pay, or said they did not yet accept it. At all of the locations, the store clerks also reported not receiving prior instruction by their management on Apple Pay going live, or how to use it. Apple says 22,000 retailers are ready to accept Apple Pay.

Here are some highlights:

• At Panera Bread, Walgreens, Babies"R"Us, Duane Reade, and Petco, cashiers could not confirm that their point-of-sale (POS) systems were Apple Pay-ready. We were able to make Apple Pay work anyway, by taking the initiative and completing the transaction ourselves.
• At RadioShack, a store manager informed us they haven't yet completed the necessary "update," that would allow the store to accept Apple Pay.
• Only employees at McDonald's, Whole Foods, and American Eagle were aware that they accepted Apple Pay.
• At Staples and Sephora clerks said they did not yet accept Apple Pay. While these two retailers aren't listed on Apple's site as partners, they have been named in numerous press reports as Apple Pay retailers.

Despite the lack of information and confusion about Apple Pay, that did not turn out to be a major hurdle. The shopper is the party that initiates an Apple Pay-based transaction by holding the phone near the payment terminal. In most cases, we were able to carry out the transaction on our own, without directly communicating with the store clerk.

But if shoppers explicitly ask to use Apple Pay, they could mistakenly be dissuaded from doing so by uninformed store personnel.

3. WE ENCOUNTERED CONSIDERABLE DIFFICULTY WHEN TRYING TO INITIATE A REFUND

At American Eagle Outfitters, a clerk was not able to lead us through an Apple Pay refund, since cashiers had not been instructed on how to do so. There was a bit of confusion because Apple Pay's virtual number for each credit card does not match the physical credit card number (this is an intentional security feature). We were only able to claim a refund after a period of trial-and-error.

4. OVERALL, THE EXPERIENCE ITSELF FEELS SIMPLER AND SAFER THAN USING A CREDIT CARD OR CASH

Many analysts observe that Apple Pay is not any easier than using a credit card. We disagree. Apple Pay is not a particularly revolutionary experience, but assuming a knowledgeable user, the number of steps required to pay with an iPhone are fewer than those involved in using cash or a card (no change needs to be given, no receipt needs to be signed) and does not even require cashier interaction. All a user does is place their iPhone on the store's keypad, wait for the image of their credit card to appear, and authenticate with their thumb.

BI IntelligenceA notification following a completed transaction on the phone's lock screen.

The iPhone vibrates when the sale is successfully completed, adding a satisfying tactile feel to the experience. Users can opt to receive a notification from Passbook following a completed Apple Pay transaction. (See image, right).

From the consumer's point-of-view Apple Pay - with fingerprint authentication and "virtual" credit card numbers - feels very secure.

5. IN-APP PURCHASE FUNCTIONALITY FEELS VERY LIMITED

Apple Pay is not just for in-store mobile payments. It can also be used to purchase things within apps. The list of apps that currently integrate Apple Pay's in-app purchase feature is very small, and as a result the feature feels tacked-on for now. Furthermore, iPhone users can only opt-in to using Apple Pay on these apps after updating participating apps to their latest version. According to Apple, there are 16 apps that currently accept Apple Pay. These include Target, Lyft, and Hotel Tonight.

This note first appeared earlier this week on BI Intelligence, Business Insider's premium subscription service covering the tech industry. For full access to our coverage on mobile computing, payments, digital media, and e-commerce, sign up for a subscription today.

Digital Media Analyst Mark Hoelzel contributed to this report.