Apple Pay

This post is a part of our People’s Insights monthly brief for November, called “Disrupt, or be Disrupted.”

Apple recently unveiled a project that took years in the making: Apple Pay.

The iPhone 6 and 6 Plus come with NFC chips which enable safe storage of credit and debit cards and quick payment by tapping the device on NFC-enabled terminals. Apple Pay also works for in-app payment on these devices, and the iPad Air 2 and iPad mini 3. Apple Pay currently works only in the U.S. for major banks and about 220,000 retailers.

Apple Pay

How it works?

iPhone users begin by adding their cards to their Apple Pay Wallets. This can be done by taking a photo of the card or manually entering details. Apple Pay can then be used to pay for purchases online and at stores with NFC terminals (such as Visa’s PayWave, MasterCard’s PayPass and American Express’ Express Pay terminals). Simply tap the phone against the terminal, and confirm by swiping your finger print. Recent purchases are stored in the Passbook app.

Apple Pay touch id

Apple sells Pay as a more secure way to pay: you don’t have to hand over your card, and it relies on single-use tokens for transactions which means hackers can’t steal your data (more on that here). You still pay using your card, so you qualify for rewards points etc. Rumor is that Apple charges a small fee for all transactions, possibly to the banks.

Adoption of Mobile Payment

In the first three days, Apple reported that 1 million cards were registered across the U.S. In the first three weeks, Whole Foods reported 15,000 Apple Pay transactions across 384 stores, McDonald’s said that Apple Pay made up half of all mobile payments, and Walgreens reported that mobile payment had doubled.

The hype around Apple Pay spread over to other mobile wallet users too. Softbank and Google said that their own apps saw a boost in downloads and use since the launch of Apple Pay.

Impressive? Maybe not, this PYMNTS blog post argues, saying that the behavior is spread across a large country. It’s not as strong as adoption of the Starbucks mobile app which sees 7 million transactions a week. And it may not last once the hype dies down.


That being said, Apple Pay has an impressive range of partners, with more planning to come on board.  Apple has also partnered with China’s Union Pay bank to enable in-app purchases in China.

Apple does however face some challenges from retailers who have invested in their own mobile payment service CurrentC. These retailers, including CVS, Rite-Aid, Walmart and Best Buy have disabled NFC-terminals in their stores to ward off the competition, much to the ire of some Apple users.

All in all, it’s a long term game and Apple seems to be in for the long haul.

Watch the intro video by Verge: Using Apple Pay in the real world


Disrupt, or Be Disrupted – People’s Insights from MSLGROUP

Nidhi Chimnani

Nidhi Chimnani

Nidhi is Director of Research and Insights at MSLGROUP. She tracks digital consumer trends for People’s Insights and is community manager of MSLGROUP’s insights community SPRINT. Tweet her at @nidhichimnani

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