Apple Pay Overtakes Starbucks as Most Popular Mobile Payment Platform in the US

[stephenschimpf]

You can use Apple Pay or any other contactless technology at 99.9% of payment terminals in Australia. Essentially all stores, restaurants and cafes. Even trains and busses. How contactless payments are still niche in the US is crazy to think.

The United States is behind the rest of the world in so many ways, yet most Americans think they have the best of everything. Credit cards in Europe had chips long before most of us got them in the United States.

The last time my girlfriend and I were in Scotland and England, a couple of years ago, we asked "do you take Apple Pay?" and everyone looked at us like they didn't understand why would we ask something like that. They all took Apple Pay. We never used most of the paper money we'd converted.

 

[bobtem]

Laughing! A brick in your butt aint the answer for those who want to still have a wallet. I think they are stuck with overstock and don't know what to do.

who wants a hard one jamming into their butt cheek?

 

[TheMountainLife]

Also, why should Apple and others adopt something that gives merchants an excuse not to enable contactless?

I agree, though it goes both ways. Why should the merchant spend money to adopt contactless and give up the ability to track purchases. That's the way some see it unfortunately.

Making mobile payments in USA without pondering about all of the variables, setup of the business or holding up the line as I've witnessed countless times would be AMAZING. I didn't say Samsung Pay was perfect but it has gotten me out of every bind I've been in where my wallet was either unavailable or the terminal refused to read my corporate card and Apple Pay wasn't accepted.

I doubt Apple will adopt MST but can only imagine how lovely it would be. Who wouldn't want their Apple Pay to work virtually everywhere?

 

[tmiw]

The United States is behind the rest of the world in so many ways, yet most Americans think they have the best of everything.

Eh, I'm not sure the last part is all that true anymore. I think people are realizing the former and are getting very pissed off, hence the current political situation. That's a topic for somewhere not here, though.

I agree, though it goes both ways. Why should the merchant spend money to adopt contactless and give up the ability to track purchases. That's the way some see it unfortunately.

Except they don't have to give up on that if they don't want to. It just requires more work is all (such as actually implementing a loyalty program so you can integrate it into Wallet, like what Walgreens did). However, a fair number of merchants do have loyalty programs yet don't have contactless support, so I don't think data collection is the only reason.

IMO, I think interchange fee issues are the biggest reason (since AP and other contactless technologies could accelerate the move of smaller transactions away from cash), followed by technical integration issues (since US merchants love custom setups instead of using whatever their POS vendor or acquirer gives them). Only the biggest stores are really able to take full advantage of data collection, and a fair number of those already support AP.

Making mobile payments in USA without pondering about all of the variables, setup of the business or holding up the line as I've witnessed countless times would be AMAZING. I didn't say Samsung Pay was perfect but it has gotten me out of every bind I've been in where my wallet was either unavailable or the terminal refused to read my corporate card and Apple Pay wasn't accepted.

I doubt Apple will adopt MST but can only imagine how lovely it would be. Who wouldn't want their Apple Pay to work virtually everywhere?

I recommend a trip to Europe if you want a taste of that. I only had to use my physical cards a handful of times in the UK a few years ago, for instance, and it's likely even better now.

 

[MacBH928]

instead of Tim China continues the price hiking to make extra growth for Apple, maybe they should spinoff Apple Pay to other platforms and make it a competitor to Paypal, Bitcoin, and even Master/Visa.

Why are they locking it in the Apple eco-system, if its truly private, everyone is looking for that.

 

[cbaca51]

All the places I frequent now use Apple Pay. Whole Foods, Best Buy, subway, Acro gas station..... target was the last hold out and now they have it finally. Dominos is probably the only other spot that I go all the time that doesn’t use Apple Pay.

 

[lartola]

That seems like a weird comparison to make, but as long as it has been made, it actually to me makes Apple Pay sound less popular than I would have guessed.

If I understand this right, only slightly more people use Apple Pay, which is a way of using almost any credit card for any purchase at any location, than use the Starbucks mobile order app at Starbucks cafes.

That means out of the virtually endless places you could use Apple Pay, about the same number use the Starbucks mobile app to pay at a single store.

I don't see that as a winning statistic.
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I don't think they're referring to Apple Card but to Apple Pay which you can use with virtually any payment method like a debit card or Apple's own Apple Cash.

And it’s not the first time I see such a comparison. I’ve read articles before comparing apple pay and walmart pay, which like the starbucks app can be used only at one particular merchant, Walmart.
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All the places I frequent now use Apple Pay. Whole Foods, Best Buy, subway, Acro gas station..... target was the last hold out and now they have it finally. Dominos is probably the only other spot that I go all the time that doesn’t use Apple Pay.

Did Dominos turn off the contactless readers? they were indeed accepting apple pay at all their physical locations as of 2017.
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Thought the same thing. comparing one store to a payment system used everywhere and it just beat it.... yikes. I try to use Apple pay everywhere, but it's still kind of awkward. Hopefully it gets better.

yet people do that all the time. How many articles have we read comparing apple pay to walmart pay in the past?
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People will use whatever Pay thing their phone or watch provides. They are all practically identical and the innovation is over more or less. Market penetration at this point will reflect device market share as eg: Google Pay, or Samsung Pay or Apple Pay are all compliant with the same requirements the banks require and so usability is about the same.

Samsung Pay has one key difference vs all others: it can communicate with magnetic stripe readers. It may not matter much in Europe or Australia where NFC contactless is ubiquitous, but it does make a big difference in the US, South Korea or Mexico where NFC is still niche.
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I just don't understand how they come up with the 70% of retailers statistic. I live in Phoenix, AZ (USA), one of the largest cities in the country... Apple Pay is nowhere to be found, in comparison to places that don't have it. Yeah, McDonald's, Whole Foods, Starbucks, random other coffee shops. That's about it. No gas stations, no grocery stores (beyond Whole Foods), no Walmart, no Target, very few stores in malls.

Thank god BevMo accepts Apple Pay, or I would have to move!

I think Apple’s percentage only includes stores, but not other places such as gas stations, sit down restaurants, post offices, parking lots, storage facilities, etc. That being said, there are other grocery store chains besides Whole Foods accepting apple pay such as Albertsons Group (Randalls, Safeway, Albertsons, etc). And BTW Target DOES ACCEPT APPLE PAY. After holding out for several years, Target finally relented in 2018 and enabled contactless payment, and thus apple pay, at all their stores (though, strangely, they always did accept apple pay in their app).

 

[lartola]

Phoenix is a large city, so your sample size of the city, let alone the state or the country, is not representative of actual Apple Pay adoption.

You forgot Walgreens and CVS. And Apple Stores. So yeah, small businesses aren't quite there yet but there are several major companies with multiple locations accepting Apple Pay.

And he mistakenly mentioned Target. Target does accept apple pay at all their stores since 2018 (but strangely they always had it in their app). They held out for several years, but finally relented.
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I had no idea that the Starbucks payment app was that popular. I have the gold card, but never use the app. I guess I have to get with the times...

Tangent: Does Starbucks accept Apple Pay?

Yes, they do accept apple pay.

 

[Abazigal]

That is why do many places don't accept apple pay, apple gets a cut. Apple are themselves slowing the adoption of it by being a middleman.

This makes absolutely zero sense. The cut these shops have to pay to banks is the same regardless of whether Apple is involved or not. The reason they haven’t supported Apple Pay is pure indifference, plain and simple.

 

[lartola]

I am sure Apple having their own credit card has helped boost Apple Pay adoption somewhat. This will in turn incentivise more places to support Apple Pay in the US, which in turn leads to more people using it. Meanwhile, paying for purchases with the Apple Card will also allow Apple to earn more commission than via conventional credit cards.

So simple, yet so genius.

I doubt it. Users who have the Apple card are still mostly using the physical titanium card because at too many places they can’t do apple pay. And merchants who still aren’t accepting any contactless payment won’t be incentivized by the Apple Card to turn it on now, since apple card users can still pay at those places anyway by inserting the titanium card in the chip reader.
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That is why do many places don't accept apple pay, apple gets a cut. Apple are themselves slowing the adoption of it by being a middleman.

Apple only gets a cut from the banks that desire to allow their customers to add their cards to apple pay, but not from any merchants. Merchants only pay a fee to their bank for accepting credit card payments regardless of how the payment was submitted; it makes no difference whether the payment was done using apple pay or a chip card. They don’t pay anything to Apple.
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Same in China, contactless payment are everywhere, I can’t believe the US is so behind in this field.

China doesn’t do contactless payment, they do QR codes. It’s different. NFC contactless payments made using mobile wallets such as apple pay are basically payments made with a credit or debit card and use networks such as Visa, MC, etc to process the payment. The QR code based payments used in China and recently implemented in Mexico too are basically bank transfers that were sped up by having the users scan a QR code instead of manually entering all the recipient’s bank account information. The main benefit of those QR code based systems is for merchants, not for the end customers, because they will save a lot of money worth of fees and equipment purchase or rental.

 

[Juiceboy]

America is so far behind it's crazy. In Aus Apple pay (Contactless payments) are accepted everywhere. Many places don't even have strip or chip payment options as contactless is so common. Even tiny markets and food trucks, most vendors have square readers or eftpos terminals.

 

[coopguy]

This is good for the overall market, Apple users and Fitbit/Samsung/other Android alike. Apple pay definitely seems to be the popular solution near me (if a store doesn't have on the screen all the logos, they're most likely to put an Apple Pay logo on the reader alone; since they rely off contactless MSD/contactless EMV standards, all the mobile wallets work similarly at supported terminals).

Apple continuing to push transit contactless will be to the benefit of everyone - both in non-transit and transit scenarios alike as people get used to using their phone in contactless mode for payment.

This makes absolutely zero sense. The cut these shops have to pay to banks is the same regardless of whether Apple is involved or not. The reason they haven’t supported Apple Pay is pure indifference, plain and simple.

People often misinterpret Apple Pay as charging a merchant cost, but it's to the issuing banks - Apple takes 15 basis points (or 15 cents on every dollar) from the bank that issued the credit card out of the cut of swipe fees remitted to the issuing bank. Since Apple Pay provides strong authentication (Cryptogram + PIN or fingerprint + CDCVM (if supported at terminal) the banks find this cost worthwhile versus fraud & cardholder satisfaction, but the actual retailer doesn't pay any more.

For certain terminals contactless transactions make it more convenient over cash/dipping and process online in credit mode (with 2-4% swipe fees) rather than debit mode (for PIN debit at large merchants, PIN debit from banks is capped to 21 cents + 5 basis points [5 cents on every $100] per transaction for banks with over $10B in assets). This is why Walmart chose to pick terminals not compatible with Apple Pay and back CurrentC (and when that failed, launch Walmart Pay instead), and why Target pushes Circle (formerly Cartwheel) and Kroger pushes their own payment app.

QR Codes are way clunkier than tap payment and even Chase couldn't use its inertia to make QR Code payment work (Chase Pay is being retired for in-person purchases early 2020).

 

[MadeTheSwitch]

I use Apple Pay all the time and love it! My husband uses it at work on the vending machines which is real handy. No more scraping for change or dollar bills.

 

[lartola]

This is good for the overall market, Apple users and Fitbit/Samsung/other Android alike. Apple pay definitely seems to be the popular solution near me (if a store doesn't have on the screen all the logos, they're most likely to put an Apple Pay logo on the reader alone; since they rely off contactless MSD/contactless EMV standards, all the mobile wallets work similarly at supported terminals).

Apple continuing to push transit contactless will be to the benefit of everyone - both in non-transit and transit scenarios alike as people get used to using their phone in contactless mode for payment.



People often misinterpret Apple Pay as charging a merchant cost, but it's to the issuing banks - Apple takes 15 basis points (or 15 cents on every dollar) from the bank that issued the credit card out of the cut of swipe fees remitted to the issuing bank. Since Apple Pay provides strong authentication (Cryptogram + PIN or fingerprint + CDCVM (if supported at terminal) the banks find this cost worthwhile versus fraud & cardholder satisfaction, but the actual retailer doesn't pay any more.

For certain terminals contactless transactions make it more convenient over cash/dipping and process online in credit mode (with 2-4% swipe fees) rather than debit mode (for PIN debit at large merchants, PIN debit from banks is capped to 21 cents + 5 basis points [5 cents on every $100] per transaction for banks with over $10B in assets). This is why Walmart chose to pick terminals not compatible with Apple Pay and back CurrentC (and when that failed, launch Walmart Pay instead), and why Target pushes Circle (formerly Cartwheel) and Kroger pushes their own payment app.

QR Codes are way clunkier than tap payment and even Chase couldn't use its inertia to make QR Code payment work (Chase Pay is being retired for in-person purchases early 2020).

Good explanation, thanks, but a couple of clarifications: First, Walmart didn’t choose to pick terminals not compatible with Apple Pay. They bought fully compatible terminals at all their stores, such as verifone’s mx 915 or ingenico’s isc 250, but chose to turn off the NFC readers on all of them and only keep the chip and magnetic stripe readers working. As for Target, they relented and re-enabled all the contactless readers in 2018 so they do accept apple pay now (though, strangely, they actually always accepted apple pay in their app).

 

[stars_fan]

That is why do many places don't accept apple pay, apple gets a cut. Apple are themselves slowing the adoption of it by being a middleman.

Where did you hear that, CNN?

 

[lartola]

Where did you hear that, CNN?

That misconception seems to be extremely popular. Apple does get a cut from transactions where Apple Pay is used, but it's not from the merchants that Apple gets its cut as many people erroneously believe. Apple gets its cut from the banks that allow their customers to add their cards to Apple Pay. Proof of this is the fact that merchants located outside the countries where apple has officially rolled out Apple Pay are still able to accept it as long as they can accept contactless payment.

 

[deeddawg]

Apple takes 15 basis points (or 15 cents on every dollar) from the bank that issued the credit card out of the cut of swipe fees remitted to the issuing bank.

I believe you’re off by two orders of magnitude.
It should be 15 hundredths of a cent per dollar. 0.15% not 15%

Just clarifying for other readers.

 

[showtunes00]

You can use Apple Pay or any other contactless technology at 99.9% of payment terminals in Australia. Essentially all stores, restaurants and cafes. Even trains and busses. How contactless payments are still niche in the US is crazy to think.

Yes, and for this reason I very rarely carry my wallet around. I use Apple Pay everywhere.

 

[coopguy]

I believe you’re off by two orders of magnitude.
It should be 15 hundredths of a cent per dollar. 0.15% not 15%

Just clarifying for other readers.

Nope, you are 100% correct - your clarification point is accurate and I appreciate it!

A basis point is one-hundredth (1/100) of a single percent. So 15 basis points would be fifteen cents ($0.15) on every $100.00 USD. This is an accurate statement on how Apple pay works.

Obviously 15% on the dollar would be obscene with 2-4% general credit card processing rates and would be a huge reason to block Apple pay if true! But it isn't. Apple takes 15 cents on a hundred dollars and the merchant doesn't pay extra for this.

Good explanation, thanks, but a couple of clarifications: First, Walmart didn’t choose to pick terminals not compatible with Apple Pay. They bought fully compatible terminals at all their stores, such as verifone’s mx 915 or ingenico’s isc 250, but chose to turn off the NFC readers on all of them and only keep the chip and magnetic stripe readers working. As for Target, they relented and re-enabled all the contactless readers in 2018 so they do accept apple pay now (though, strangely, they actually always accepted apple pay in their app).

Target is pushing Cartwheel still with exclusive discounts that go well beyond credit card cashback, but they do accept contactless as of mid-to-late 2018. Walmart pay is basically without value; it's slower and Walmart eliminated savings catcher [previously it was restricted to it for grocery price match),

I've only seen Ingenico hardware at Walmart locations. I'm not sure if that's regional or not. Support might be disabled on software (Ingenico/Verifone sometimes sell similar models without contactless support) but either way, Walmart doesn't seem inclined to budge.

 

[konqerror]

The United States is behind the rest of the world in so many ways, yet most Americans think they have the best of everything. Credit cards in Europe had chips long before most of us got them in the United States.

The reason why Europe went to chip was because their high phone call costs (due to their historical government telephone monopolies), and later the high fraud rates from Eastern Europe. This was discussed earlier in the thread.

As a tourist, you'd have completely missed high European phone rates. For example, if you called British Airways in the US from a landline, you'd pay nothing. They have a toll free number. If you called them from the UK, you'd be calling an 0844 number, which would cost your 12 cents a minute plus 8 cents connection fee.

Other examples of call rates in the UK:
Call somebody's cell phone, due to calling-party-pays: 10 cents a minute
Call the police in a non-emergency (101, like 311 in the US): 19 cents

 

[BuddyTronic]

Too bad it’s a credit card, I would defintely indulge in prepaid debit or something
Cause: 24% more spending YoY

Credit cards are free to use - all you need to do is pay your monthly statement in full and on time.

To be clear - if you spend $650.00 on your credit card, your next statement will show it, and you gotta pay it in full and on time. If you do that, there is no interest charge - you got to use the credit card for free.

I betcha a lot of folks just don't know that - so I just told you the facts.

 

[deeddawg]

Credit cards are free to use - all you need to do is pay your monthly statement in full and on time.

To be clear - if you spend $650.00 on your credit card, your next statement will show it, and you gotta pay it in full and on time. If you do that, there is no interest charge - you got to use the credit card for free.

I betcha a lot of folks just don't know that - so I just told you the facts.

Amen!

Name a debit card paying 2% cash back on all purchases! Lol

I get that not everyone has the discipline to avoid spending what they don’t have cash to cover, but if you do it pays to use credit cards for everything you can.

Just don’t buy what you don’t have cash for and pay the card off every month if not more often. Zero interest and zero fees. 2% cash back minimum, up to 5% if you play the categories/quarters games.

 

[BuddyTronic]

I really think the cash back on the Credit Card (and Apple Pay via the card) will start to drive a lot more use this year. I think their 2020 estimate for users it wat too low. Large scale usage will also force retailers to start to open up their systems from a customer service perspective.

The worst thing that ever happened was the CurrenC consortium of companies who agreed to do their own payment system and all agreed to lock out other vendors like ApplePay. Once that collapsed, those retailers are starting to open their systems back up but it has been slow.

As for Starbucks, the reason their epayments are so big is because it allows you to store gift cards and use them via electronic pay, it allows you to order ahead and skip the line, it allows you to automatically add credits to your accounts on a weekly basis and they offer rewards like free coffee after a certain number of purchases. To put it in perspective, one report I saw said they have 23 million electronic users PER MONTH. That is 1 in 16 people in the US using Starbucks electronic pay per month. Show how much Americans love their coffee.

That coffee thing is mind blowing. Not so long ago "coffee" anywhere in USA meant "instant coffee" in my experience. "Nescafe" packet and hot water was coffee in USA until Starbucks I think. Starbucks isn't so wonderful unless you really want 2 pumps of substance A and 3 pumps of substance B and a shot of coffee - I don't! I think it's a prestige thing for working stiffs mainly.

Same thing for beer. You'd get that good old watered down thin beer for dirt cheap in the states. Budweiser, Coors, Old Milwaukee - and that beer is pretty good and has it's own category in beer world. But now every millennial wants extreme IPA India pale ale craziness. Hoptastic crazy beer. Every restaurant has "micro brewery" beer and it is inevitably over hopped weird beer. I'm so scared of all these beer connoisseurs I end up getting any big brand draft instead.

Anyway, a lot of people like the new things. Amazing that they have so many Starbucks transactions from their system! Really Wow! Glad I have only been to Starbucks like 6 times in my life!
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Amen!

Name a debit card paying 2% cash back on all purchases! Lol

I get that not everyone has the discipline to avoid spending what they don’t have cash to cover, but if you do it pays to use credit cards for everything you can.

Just don’t buy what you don’t have cash for and pay the card off every month if not more often. Zero interest and zero fees. 2% cash back minimum, up to 5% if you play the categories/quarters games.

Apple credit card is one

But that's not such a big deal.

The big deal about Apple credit card is that it is made of Titanium, and is all white and has no words on it or something. It's all about prestige. Millenials love this stuff.

I probably get 3% or even much higher (like 6% according to a rough calculation) due to a particular usage of the reward points. It's a bit specific, and most people won't figure it out. I get Aeroplan points, from my Aeroplan Visa card. You can book flights obviously - but where you make the >3% value is when you spend the points on business-class or first-class international flights. Price out a long flight by economy vs business class. Let's say Chicago to Hong Kong. Biz class will be like $6000.00, and economy will be $1700.00 - something like that. The $6K means you stopped thinking about it, I realize that, but that's why most people never figure this out. Points-wise it's 80,000 vs 110,000. So for only 30% more points you get a ticket worth nearly quadruple. Of course you have to appreciate that, but if you only fly business class, this card is the best thing going - better than 1% cash back or 2% for Apple merchandise.

 

[lartola]

Nope, you are 100% correct - your clarification point is accurate and I appreciate it!

A basis point is one-hundredth (1/100) of a single percent. So 15 basis points would be fifteen cents ($0.15) on every $100.00 USD. This is an accurate statement on how Apple pay works.

Obviously 15% on the dollar would be obscene with 2-4% general credit card processing rates and would be a huge reason to block Apple pay if true! But it isn't. Apple takes 15 cents on a hundred dollars and the merchant doesn't pay extra for this.



Target is pushing Cartwheel still with exclusive discounts that go well beyond credit card cashback, but they do accept contactless as of mid-to-late 2018. Walmart pay is basically without value; it's slower and Walmart eliminated savings catcher [previously it was restricted to it for grocery price match),

I've only seen Ingenico hardware at Walmart locations. I'm not sure if that's regional or not. Support might be disabled on software (Ingenico/Verifone sometimes sell similar models without contactless support) but either way, Walmart doesn't seem inclined to budge.

yeah the ingenico isc 250 (photo below) is what they usually have at Walmart. They use the same ones here in Mexico, and just like in the US with the NFC disabled. And also like in the US, the only form of payment with a phone that can be used at Walmart stores in Mexico is their own app, which for the mexican market is a different one from Walmart Pay, called Cashi (BTW although one bank in Mexico announced in october 2018 that they were working with Walmart to enable contactless payment, nothing has changed at their stores since then except for the launch of their own mobile payment app).

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Credit cards are free to use - all you need to do is pay your monthly statement in full and on time.

To be clear - if you spend $650.00 on your credit card, your next statement will show it, and you gotta pay it in full and on time. If you do that, there is no interest charge - you got to use the credit card for free.

I betcha a lot of folks just don't know that - so I just told you the facts.

Not all. At least in the US some credit cards do have an annual membership fee. I have a mastercard with a fee of about $20 a year (not much, but not free) and an Amex with a fee of just over $100/year. That’s why apple touts the lack of any fees on their card as a selling point for it.

 

[BuddyTronic]

Not all. At least in the US some credit cards do have an annual membership fee. I have a mastercard eith a fee of about $20 a year (not much, but not free) and an Amex with a fee of just over $100/year. That’s why apple touts the lack of any fees on their card as a selling point for it.

Oh that's right actually. I guess you'd have to shop around. Membership Fees are different than interest though - but yeah it's still money.

My usage of credit card is pretty high, but every scale of customer might need to shop around for the best deal and best fit.

No doubt the Apple Card has some good things about it - but mainly my point is, if you pay your bill on time, the card is free. It's a fallacy for anyone to think they have to pay interest when they use a credit card. It baffles me that half of USA citizens carry a balance on a credit card, and does in fact pay interest - that's very bad and I can hardly believe it when I think about it a bit.

It's like the guys who drive a car always with the needle near empty - it doesn't cost more to drive with a full tank.

PS - thanks to my dad for teaching me to use my Visa for everything I possibly could and remember to pay the statement balance on time!