LOMBARD, Ill.—Has all the buzz around Apple Pay translated into increased usage of mobile payments?
The answer is a qualified “yes.” Initial findings from Raddon Financial Group’s recent consumer research surveys suggest Apple Pay has had at least some influence on mobile payment adoption.
Overall, 7% of consumers in the U.S. conducted an in-store mobile payment – up from 4% a year ago. Millennials lead the way, with 15% using mobile payments at the point of sale, according to Raddon’s spring 2015 data.
“Perhaps most telling are the shifts that have occurred in two areas,” said Marcus Rothaar, Raddon senior research analyst. “First, in-store mobile purchases are being made at locations beyond Starbucks and Dunkin’ Donuts. Of the 4% of consumers who made in-store mobile payments in March 2014, 74% purchased coffee, tea or snacks.”
Rothaar said that this likely can be attributed to the success of coffee retailers tying rewards programs to their mobile apps, allowing customers to preload funds to the app and then make their purchase by waving a QR code at the cash register, earning points toward the next free cup of coffee.
“This may prove the way to a person’s heart – and mobile wallet – is to offer free coffee and donuts,” observed Rothaar. “Or more accurately, free perks and reward incentives can in fact influence consumer payments behavior.”
Rothaar said it is noteworthy that one year later, among the 7% of consumers who made in-store mobile payments in February 2015, purchases expanded beyond coffee and tea. “This is not to say fewer consumers are using the Starbucks app, but rather as the universe of mobile payers has grown, they are spreading their mobile payment wings to other merchants.”
Rothaar said that the second area where the influence of Apple Pay can clearly be seen is in mobile purchase activity by smartphone type.
“Of the 59% of U.S. consumers with a smartphone, 10% have an iPhone 6. Among iPhone 6 owners, nearly a third have made a mobile in-store purchase. Contrast this with those who have earlier versions of the iPhone without Apple Pay capabilities, where only 10% have made a mobile in-store purchase.”
While Android users account for 51% of the smartphone market in the U.S., only 7% have made a mobile purchase. “This is partly attributable to the fact that the Android platform is much more fragmented across a wider variety of devices with various degrees of functionality,” Rothaar explained.
The data suggests Apple Pay has started to move the needle on both customer awareness and usage of mobile payments, but it also raises several additional questions, added Rothaar:
- Will consumers continue to use Apple Pay and other mobile payment options once the novelty wears off?
- For those who have made an in-store purchase with their phone, was the experience better than other payment options?
- What is their incentive to replace their previous way of paying for things? Was it faster, easier and more secure than swiping a credit or debit card?
- Are they swayed by the notion of tokenization and the idea that a merchant would never have their card information to put them at risk of a data breach?
- In short, will they use Apple Pay again?