Smartphones have come to replace so many aspects of modern life, and now your wallet may be one of them.
For years, tech companies have aimed to create a secure method that consumers can use to pay for items with their smartphones. Ultimately, those attempts have been unsuccessful, but with the early success of Apple Pay, the industry may have finally cracked this problem.
Apple Pay is just weeks old and already major retailers are reporting that there are consumers wanting to pay with their iPhones. Competitors Google and Softcard have also noted that Apple has increased the general awareness of mobile payment capabilities.
Which retailers are using Apple Pay? Whole Foods is one of the retailers that is reporting an uptick in mobile payments. The high-end grocery store chain has processed more than 150,000 Apple Pay transactions. McDonald’s accepts Apple Pay at their 14,000 restaurants across the country, and has reported that 50% of their tap-to-pay transactions have been through Apple’s service. Walgreens has announced that its mobile payment transactions at their nationwide chain of drug stores have doubled since the release of Apple Pay.
Although Apple Pay isn’t the only – or biggest – player in the mobile payment industry, the retailers’ early numbers point to a growing acceptance from consumers. Analysts note that Apple has been able to tap into something with consumers that other providers simply don’t have. Apple has a long track record of appeal with consumers. Their brand is seen as easy to work with and trustworthy, which may eliminate any hesitancy on the part of consumers to use a mobile payment service.
Other mobile wallet providers, like Softcard (backed by AT&T, T-Mobile and Verizon) and Google, have noted that Apple’s entry into the industry may be good for the industry overall.
Apple Pay is a boost for everyone’s business. “Apple Pay has been a huge tailwind,” said Michael Abbot, chief executive of Softcard. He noted in an interview with the New York Times that Apple’s entry has prompted many companies to want to support near-field communication technology. NFC technology makes the mobile payment system possible. It allows devices like smartphones the ability to communicate wirelessly over short distances – for example, the few inches between a smartphone and a payment kiosk at a retailer. If more companies start to support near-field communication, this would standardize the process of paying wirelessly and help consumers use their smartphones for shopping more easily.
Even though it’s a competitor, Softcard has had a bump in interest due to Apple Pay. Since the Apple product was released, the Softcard app has been downloaded more often by new customers. Google also reports that its Google Wallet product has also been used more after Apple Pay’s release.
Just the beginning. However, the industry still has a long way to go to normalize mobile payments for consumers. Overall, spending with smartphone payment options is relatively low. According to the research firm Gartner, people spent $235.4 billion through mobile payments worldwide in 2013 and just $163.1 billion in 2013. In North America, the numbers were $37 billion in 2013, and $24 billion in the year before.
“Apple Pay is going to be a slow-burn success,” said Jan Dawson, a telecom analyst for Jackdaw Research, in an interview with the New York Times, “Until then, it will be something of a novelty and something most consumers use occasionally if they use it at all. That’s still enormous progress.”
Dawson noted that Apple Pay may be hindered because it is only available on the newest iPhone 6 and iPhone 6 plus devices. However, if or when consumers become more comfortable with the idea of paying with their smartphones, the entire mobile pay industry may see growth in the coming years.