An iPhone 6 being used to make an NFC payment via Apple Pay. Credit: IDG News Service/Martyn Williams
U.S. consumers have eschewed in-store mobile payments for years, but Apple Pay is making headway in that area just a month after the service launched Oct. 20.
Apple Pay's early success aside, the question remains over how sticky the use of mobile payments will be among smartphone and tablet users.
Will consumers try making a mobile payment a few times, and then give up? Or can Apple and other providers find ways to instill a mobile pay buying habit in reluctant Americans?
More grocers and bankers on board
Apple's latest success with Apple Pay includes the addition of support from hundreds of grocery stores within six major chains in the past week: BiLo Holding, 830 stores; Harvey's and Winn-Dixie, 530; Albertson's and Jewel-Osco, 180; Shaws and Star Markets, 150; United Food Stores, 60; and Associated Food Stores, 135. Wegmans and Whole Foods were already part of the original 35 retail chains offering Apple Pay in an estimated 225,000 stores, about 5% of all possible U.S. retail locations.
In addition, on Thursday, American First Credit Union said its Visa card now supports Apple Pay, joining more than 500 U.S. banks already supporting the service through Visa, MasterCard and American Express cards.
McDonald's confirmed Thursday that more than 50% of its in-store mobile payments at 14,000 restaurants were made with Apple Pay in its first month. Whole Foods recently said it processed more than 150,000 Apple Pay transactions in the first three weeks of the service. And Walgreens, the national drug store chain, said in-store mobile payments had doubled since Apple Pay launched.
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While the initial use of Apple Pay has been impressive, the real measure is how many return users there will be in coming months and years, and whether the transactions these users make will extend beyond fast food, groceries and Band-Aids to bigger ticket items.
"Some merchants have seen strong uptake of Apple Pay in just the first month," said Denee Carrington, an analyst at Forrester Research, in an email. "As we enter the holiday shopping season we are likely to see that trend continue, but the big question is when and how quickly consumers begin to use Apple Pay in traditional retail stores," including big department stores such as Macy's.
Carrington recently wrote that overall mobile payments will triple to $142 billion by 2019, up from $52 billion in 2014. Still, that increased total is "just a drop in the ocean of total U.S. consumer spending," and would reach just 1% of annual U.S. consumer payments of $16 trillion.
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