Apple Pay Faces Same Hurdles as other Mobile Wallets (Nov. 20, 2014)
Apple Pay has generated significant buzz since it launched on Oct. 21—and more than 1 million credit cards were registered in the payment app within 72 hours—but Leon Majors, president of the payments practice at Phoenix Marketing International, presented research in Chicago last week at BAI Retail Delivery 2014 that suggests Apple may have some of the same difficulties that have plagued other mobile wallets, including low acceptance. For example, 50 percent of smartphone owners who have installed an in-store payments app have not used it.
Another potential hurdle for Apple Pay, according to Phoenix Marketing, includes persistent consumer concerns about NFC security with 40 percent of smartphone owners reluctant to tap or waive their phones to make an NFC transaction. However, Apple Pay’s fingerprint sensor, secure element on the iPhone and tokenization during the payments process might quell security concerns.
“Apple is saying the only thing that matters is security, but consumers are telling us that’s not true,” Majors says. “People are telling us they use retailer rewards a lot, but with Apple Pay you can get your issuer rewards—your credit card points—but you can’t get retailer rewards,” he says. “Consumers aren’t going to walk away from their retailer rewards. The killer app will be the one that can combine retailer rewards with credit card reward points.”
Additional hurdles Apple Pay faces, along with other mobile wallet apps, include consumer friction during and after wallet app installation (39 percent of consumers who installed an app didn’t find the process easy); consumers aren’t sure who to call if problems occur; and recent, highly publicized breaches have made smartphone owners more protective of their personal information (51 percent of smartphone owners are more worried about how much of their personal information merchants have), according to Phoenix Marketing’s research.
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