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Signs point to Apple Pay’s success

March 23, 2015

Apple Pay's success is dependent on the availability of compatible devices in the market, so the increase in iPhone 6 and 6 Plus sales shows the technology has strong potential. Most importantly, Apple Pay is still a new service. Judging its success based on usage statistics may be premature. Instead, looking at how consumers and retailers view the technology is better indication of how well the technology is doing.

Apple Pay’s success is dependent on the availability of compatible devices in the market, so the increase in iPhone 6 and 6 Plus sales shows the technology has strong potential. The introduction of the Apple Watch should boost adoption rates as well. Most importantly, Apple Pay is still a new service. Judging its success based on usage statistics may be premature. Instead, looking at how consumers and retailers view the technology is better indication of how well the technology is doing. As of now, all signs point to Apple Pay becoming the preeminent mobile payment service. 

Consumers gravitate toward the new iPhone models
AppleInsider reported on a new survey by Cowen and Company, which indicated iPhones are growing in popularity. The survey of 3,000 people around the world found that 25 percent of all iPhone 6 and 6 Plus purchases were from users new to the iOS platform. In other words, a quarter of the smartphone buyers recently switched over from Android phones. Timothy Arcuri, analyst at Cowen and Company, surmised that the recent news is scary for Samsung and that the their newest Galaxy S6 is now under increased pressure to perform and appease consumers.

With respect to Apple Pay, the survey indicated 35 percent of iPhone 6 and 6 Plus users in the U.S. are using the mobile payment service. Approximately two-thirds of those users rely on the technology to make purchases several times a week. The majority of respondents who did not yet possess the technology expressed that their next likely purchase would involve an Apple Pay-compatible device.

“To us, Apple Pay in the near/medium-term remains primarily a driver of future hardware sales and this survey supports that view,” wrote Arcuri, according to AppleInsider.

In the report by Cowen and Company, Arcuri also talked about the Apple Watch. The analyst pointed out that over 50 percent of survey respondents, irrespective of region or phone preference, wanted to buy the smartwatch. Interestingly, more Android users were found to be interested in the Apple Watch over iOS users.

Apple Pay is growing in popularity and gets more retail partners
Business Insider explained how Apple Pay continues to show signs of growth. The service was launched in October 2014 and could only be used at fewer than 250,000 merchant locations. Now, Apple Pay is accepted at over 700,000 locations, including popular hotel chains and vending machines.

According to VentureBeat, some analysts believe Apple Pay adoption is slow amongst consumers. While it may be true that it will take time for the technology to become a staple in many people’s lives, the sentiments of those who do use it prove the product is special. Approximately 30 percent of people who use Apple Pay decide which retailers and merchants they will visit based on whether they accept payments from the service. Such strong endorsement from active users will likely result in more retail partners being added in the near future. Karen Webster, chief executive of PYMNTS commented that adoption might be considered slow, due to availability of hardware.

“Not only do you have to have consumers with Apple Pay, you have to have consumers with iPhone 6. So, you have to have a consumer with the right hardware and the merchant with the right hardware in order for it to work,” said Webster, according to the news source.

Apple Pay is a mobile payment industry leader
Ultimately, Apple Pay has caused the mobile payment industry to undergo a revolution. Many competing companies are currently working hard trying to rival Apple with their own technologies. Google recently launched a new platform for mobile payments and Samsung’s acquisition of LoopPay is another attempt to plant a flag in the digital wallet space.

Perhaps judging Apple Pay based on numbers alone is unwise. Instead, looking at retail partners, customer loyalty and the effect the technology has had on the market might be better indication of where the product is at. As of today, the technology is doing quite well.  

“I think regardless of whether Apple Pay becomes the way we pay for things, they’ve really created a road map for everyone else,” added Webster, according to VentureBeat.

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