Tag Archive for: Mobile payments

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Security Concerns and Problems at the Register Continue to Depress Mobile Pay Usage and Net Promoter Scores

(New York, NY):  Mobile pay usage among eligible consumers is down 5% compared to this time last year (25% vs. 30%). And the decline in adoption is expected to continue into Q4 – a period that has seen seasonal dips in Mobile Pay usage the past two years, according to Auriemma  Group’s Mobile Pay Tracker. This new research reveals a myriad of reasons why consumers aren’t adopting mobile payments quickly, including a lack of need and interest, and that Net Promoter Scores (NPS) are seeing significant declines. But some barriers are directly influenceable by merchants and issuers alike, namely security concerns and problems at the Point of Sale (POS).

Nearly one-third (32%) of consumers cite security concerns as a top barrier for using mobile payments. A slightly smaller proportion (21%) actually believe the method is unsafe. Auriemma’s research identified specific ways mobile pay providers could alleviate concerns that block the trialing of mobile payments.

For one, 58% of consumers want issuers to assure them that mobile payments fraud will be covered by the bank, similar to card-based payments. And 57% of customers would like to see data demonstrating the security of mobile payments, with 43% wanting direct comparisons to more common payment methods such as magnetic stripe and chip cards.

“Issuers who do these things could find themselves at the top of the mobile wallet for new adopters within their customer base,” says Jaclyn Holmes, the Director of Auriemma’s Payment Insights. “In an environment of heightened consumer anxiety regarding data breaches, it is critical to clearly communicate mobile payments’ security to customers.”

Confidence with security alone, however, isn’t enough to grow mobile pay adoption. Merchant acceptance is crucial for establishing habitual use, but many Pay users run into problems at checkout. These issues at the POS are a great risk to the most active mobile pay users, who experience the highest incidences of disrupted transactions.

The majority of Samsung Pay (74%), Android Pay (63%), and Apple Pay (52%) users consider themselves to be at least somewhat active. A notable proportion of each have said they encountered a problem at the register (44%, 33%, and 37%, respectively). The top reason for the issue, however, is unfamiliarity of store personnel (55%) followed closely by problems with the actual terminal, including “transaction did not go through” (46%) and “terminal took too long” (35%).

These issues have a clear impact on Pay user’s likelihood to recommend the service. Auriemma research reveals sharp declines between Q4 2016 and Q3 2017 in the Net Promotor Scores (NPS) of Apple Pay (from 22 to 4), Android Pay (from 18 to 13), and Samsung Pay (from 46 to 21). While Samsung Pay’s technology should render it mostly immune to problems at the POS, even it has had difficulty staying away from issues.

“One of the key benefits of Samsung Pay is that it can be used anywhere that accepts cards,” says Holmes. “But even its enthusiastic user base risks becoming disenchanted by recurring issues at the POS.”

Problems at the register don’t just impact behavior at the transaction-level. Half of those who had problems at a retail location that accepts mobile payments say the issue made them use the service less often overall. Problems at POS are particularly perilous for cards at the top of the digital wallet, who have the most to lose if the Pay transaction is unsuccessful. In fact, 45% of in-store Pay purchasers quit trying to use mobile payments entirely, and use a physical card instead.

There are many ways to educate those wary of the method, but the real question is whether issuers and merchants are willing to put in the time to train their customers and employees. While merchants may want to offer their customer’s preferred payment method, offering it without the proper employee training and support stops mobile payment adoption in its tracks. Likewise, issuers who make their card compatible with a mobile wallet without educating customers of its benefits are forfeiting potential utilization. Issuers who want to remain or become top of the mobile wallet, and merchants looking to provide a seamless payment experience for those Pay-preferred, play a pivotal role in getting them off the ground.

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group (Auriemma) in July/August 2017, among 1,505 mobile pay eligible consumers. Respondents were screened to own an iPhone 7/7+/6/6+/6s/6s+ or Apple Watch (in combination with an iPhone 5/5C/5S) – a Samsung Galaxy S8, S8 Edge/Edge+, S7, S7 Edge, S7 Active, a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5, Note 7 – Gear S2 or S3 watch (in combination with an Android/iPhone smartphone) – and/or other Android phone with KitKat (4.4) OS or newer. All respondents also have a general-purpose credit card in their own name. In addition to the quantitative web survey, eleven in-depth interviews (IDIs) were conducted in August 2017.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  Founded in 1984, Auriemma has grown from a one-man shop to a nearly 50-person firm with offices in New York and London.  For more information, contact Jaclyn Holmes at 212-323-7000.

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Don’t Blame Payments for Abandoned Shopping Carts Online

(New York, NY): Online shoppers browse for items differently than their in-store counterparts. They peruse products without salespeople, lines, or the pressure that comes with hours of operation. In this environment, shopping carts can sit idle for days while shoppers mull over a potential purchase. A whopping 79% of consumers have left an online cart unattended, according to new data from Auriemma Group, developed specifically for the Merchant Advisory Group’s (MAG) 2017 Annual Conference. The study of 800 debit cardholders revealed why consumers abandon an online purchase, how often these abandoned carts make it to checkout, and shed light on how retailers can use online checkout services and mobile payments to improve conversion rates.

When asked why they abandon their carts, online shoppers typically cite merchant-controlled reasons, such as finding a better price elsewhere (33%), waiting for a sale (29%), or trying to reach a free shipping or discount minimum (29%). The good news? Abandoned carts don’t necessarily stay abandoned forever. In fact, 80% of cardholders say the majority of their online purchases are completed at a later date.

“Online shoppers don’t feel the same sense of urgency consumers may experience in-store,” says Jeff Tennenbaum, Director at Auriemma. “For some, adding items to their cart could simply be a way to keep track of them. Will they go on sale? Are they cheaper somewhere else? And while payment options may not push consumers to begin the purchasing process online, they certainly encourage completion once a purchase decision has been made.”

Online checkout services and mobile payments increase the likelihood of online order completion for those that use them. This is true for those who have ever used Apple Pay (63% are more likely to complete), PayPal (61%), Visa Checkout (59%), and/or Android Pay (57%). Although it is not instrumental in getting them to checkout, the smooth, secure payment experience online checkout and mobile payments provides does help online shoppers complete their purchase.

“We’re excited to share more data that illustrates how retailers can use the online checkout experience to improve their online conversion rates,” said Tennenbaum. “Retailers who attend the MAG Conference this month will gain a new understanding of how their customers interact with them online, what that means for brick and mortar, and how that translates to the overall shopping experience.”

Tennenbaum will be speaking at MAG’s 2017 Annual Conference on Wednesday, September 27th from 4:15-4:35 p.m. in a TED-style presentation titled, “New Customer Experiences and Expectations in Omnichannel Commerce.” He will also be a panelist for “Top of Wallet in Digital Commerce: The Critical Role of Default Payments” on September 28th at 10:15 a.m.

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma in June and July 2017, among 800 adult debit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines. For more information, contact Jeff Tennenbaum at (212) 323-7000.

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Incentives Push Mobile Pay Users Over Tipping Point, Increasing Method Frequency and Spend at Checkout

(New York, NY):  Mobile pay users are an enthusiastic bunch, but admit they sometimes forget to choose mobile payments at checkout. New data from Auriemma Group’s Mobile Pay Tracker suggests that transaction-based incentives may provide the nudge needed to get higher frequency and spend through mobile pay. The study of 1,505 mobile pay eligible cardholders didn’t just reveal incentive’s benefits to Pay providers, but to issuers and merchants as well. Those who leverage incentives are positioning themselves for greater success as mobile payments become more commonplace.

Regardless of who funds the incentives, issuers, merchants, and Pay-app providers all have something to gain. Increases in mobile pay spend and frequency of use will have a marked impact on the most frequently used (MFU) card in the mobile wallet, while also encouraging use of mobile pay instead of a physical wallet. As the mobile pay user population grows, it will become increasingly important to be the top of mobile wallet card. Interestingly, two-thirds of mobile pay users already say that the MFU card in mobile pay is also their most used card overall.

“While cards used in the mobile wallet benefit from merchant- and Pay-funded incentives in the short term, those not already being used could miss out, especially as mobile pay grows,” said Jaclyn Holmes, Director of Auriemma’s Payment Insights. “Pay apps very well may be the future of payments. Incentives provide an opportunity for issuers and merchants to have consumers associate their brand with the payment method, which could turn out to be a valuable long-term investment.”

Currently, 25% of consumers with an eligible smartphone use mobile pay, mostly composed of a highly covetable demographic of employed, affluent, and college-educated consumers. Of these consumers, 32% recall being offered a mobile pay incentive (compared to 19% earlier in the year), and when the incentive is offered, the take rate is high: 86% of incentive recipients report claiming the incentive at the point of sale in-store or in-app.

In the past, these incentives were primarily offered by banks, but in Auriemma’s most recent study the proportion of banks offering incentives to their customers compared to last quarter dropped from 58% to 40%. Merchant-funded offers are now most prevalent (46%), and regardless of who offered the incentive, nearly eight in ten respondents (78%) report their offer was linked to a specific merchant. Many consumers, however, are not seeking these incentives out—most hear about them from friends, or through emails or letters.

Consumers who are offered incentives, unsurprisingly, use mobile payments more frequently than those not offered—demonstrating a clear influence on choice of payment method at checkout. Over a one-week period, for example, those who received an incentive to use mobile pay in-store did so 4.6 times, compared to 3.1 times for those not offered an incentive. The same is true of in-app purchases, with incentivized shoppers purchasing four times in a week, compared to 2.4 for those not offered an incentive.

“Incentives can give consumers the push they need to use mobile pay,” said Holmes. “Their greatest impact will be on consumers on the cusp of using the method, but who need an additional nudge.”

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group in November 2016, among 1,505 mobile pay eligible consumers. Respondents were screened to own an iPhone 7/7+/6/6+/6s/6s+ or Apple Watch (in combination with an iPhone 5/5C/5S) – a Samsung Galaxy S7, S7 Edge, S7 Active, a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5, Note 7 – and/or other Android phone with KitKat (4.4) OS or newer. All respondents also have a general purpose credit card in their own name. In addition to the quantitative web survey, ten in-depth interviews (IDIs) were conducted during December 2016.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines. For more information, call Jaclyn Holmes at 212-323-7000.

 

 

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Consumers Prefer PayPal to Banks for Online Checkout and P2P Payments

(New York, NY) PayPal’s clout with consumers is dominating its competition in the alternative payments space, according to recent consumer research by Auriemma Group. The study of 800 US adult credit cardholders took an in-depth look at alternative payment providers, comparing PayPal’s online checkout and P2P offerings to other notable platforms. Consumers responded with a clear preference for PayPal, citing greater familiarity, usage, popularity, and more secure technology than other providers.

“PayPal is doing a lot of things right,” said Jaclyn Holmes, the Auriemma Senior Manager who directed the study. “They are the clear favorite in the online checkout space and have earned a positive reputation with consumers. The PayPal brand is valuable, so much so that just knowing Venmo was a PayPal product increases the likelihood of cardholders using the service.”

When compared with its peers, PayPal is the most recognized and used online checkout service, with 77% of cardholders familiar with the service and 62% of those familiar currently using the service. And PayPal customers are loyal, with 81% preferring it for online transactions, and 79% using it whenever they can. This type of praise is also common for PayPal Me, PayPal’s P2P offering, which is highly favored among consumers who have tried more than one P2P app (42% prefer PayPal Me compared to 19% who prefer their bank’s P2P payment service). Banks, however, do have some strengths when compared to PayPal—notably in direct deposit, ease of accepting payments, card selection and ease of use.

Despite its overall high marks, PayPal fell short of its competition on overall trust with financial information (80% of consumers trust their primary bank; only 55% said the same about PayPal). And the majority of consumers (56%) are generally unwilling to direct deposit money into their PayPal account. There is a nuance, however: While banks win for overall trust, 69% of consumers say they believe PayPal’s technology is better at protecting their financial information.

“Although cardholders’ relationships are deeper with their primary bank than with PayPal, the fact that consumers believe PayPal’s technology is more secure may be problematic for issuers. Consumers expect financial providers to be as savvy as the players in Silicon Valley,” says Holmes. “Until financial institutions are seen as technological equals with PayPal, the brand has a clear advantage in this arena.”

Survey Methodology

The studies were conducted online within the United States by an independent field service provider on behalf of Auriemma Consulting Group in August 2016, among 800 credit card users each (“cardholders”). The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

 

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How Samsung Pay is Challenging Apple Pay User Dominance

(New York, NY): For over a year after its introduction, Apple Pay was the only real option for consumers who wanted to pay with their smartphone. That changed towards the end of 2015, when Android Pay and Samsung Pay were rolled out. Among the three payment options, Apple Pay captures the greatest proportion of eligible users, with 33% of iPhone 6 owners* reporting that they’ve used it, but the fledgling Samsung Pay isn’t far behind at 23%, according to recent research by Auriemma Group. The firm’s latest Mobile Pay Tracker found that Samsung Pay users report higher satisfaction levels and fewer issues at the point of sale compared to Apple Pay, with near equal proportions recommending both mobile payment brands.

Since its inception, Apple Pay has attracted educated, affluent, and young users, and Samsung Pay users look similar. “Only the newest, and most expensive, models of phone support mobile payment, so owners tend to be affluent,” says Marianne Berry, Managing Director of Auriemma’s Payment Insights practice. “Owners of the Samsung Galaxy and Note look demographically similar to owners of the iPhone 6 series, although iPhone owners are almost evenly divided between men and women, whereas Android phones, Samsung included, tend to skew male.”  Within the pool of eligible phone owners, mobile pay users are even more affluent and well-educated than non-users.

Users of both mobile pays rate their experience positively, but Samsung Pay users report higher levels of satisfaction than their Apple Pay counterparts (92% vs. 84%) and are near equally likely to recommend the application (49% vs. 53%). “The impact of satisfaction becomes more telling when we examine how these users pay for their monthly purchases,” says Berry. “The majority of Samsung Pay users utilize other payment methods less since beginning with Samsung Pay. No other mobile payment application can say that.” In fact, Samsung Pay eligible consumers report the highest proportion of discretionary spend going to the payment app (22%), while Apple Pay eligible consumers cite a lesser proportion (15%), behind both credit card and cash spend.

Samsung Pay users also spend more using the service ($82 vs. $75) within an average week. They report fewer difficulties at point of sale (19% vs. 31% for Apple Pay), presumably due to the technology that mimics the magnetic stripe and allows it to be used at a much wider range of merchants. “Samsung Pay advertising highlights this benefit, and 37% of those who are aware of this have used the method where other mobile pays aren’t accepted,” says Berry.

Where signage isn’t easily viewable, Samsung Pay users show greater enthusiasm to use the method in-store, with 56% always asking store personnel about acceptance compared to 42% of Apple Pay users. “Some of this may be due to its newness, with most Samsung users reporting three months of experience compared to a year for Apple Pay,” says Berry. “Even so, Samsung Pay outscores Apple Pay on a number of metrics. Right now the pool of eligible Samsung users is much smaller than Apple’s, but as more Samsung phones are upgraded, the application’s broader merchant acceptance has the potential to more quickly convert its smartphone owners to Pay users.”

Survey Methodology

The study was conducted online among 2004 consumers in the US with Apple Pay eligible (n=1,000), Android Pay eligible (n=838), and/or Samsung Pay eligible (n=327) smartphones between March 3 – April 7, 2016. Respondents were screened to own an iPhone 6/6+/6s/6s+ or Apple Watch (in combination with an iPhone 5/5C/5S)* – a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5 – and/or other Android phone with KitKat (4.4) OS or newer.  All respondents also have a general purpose credit card in their own name. In addition to the quantitative web survey, twenty in-depth interviews (IDIs) were conducted March 21, 2016 – March 25, 2016 via telephone with Android Pay and Samsung Pay users recruited from the quantitative web survey. For this round of IDIs, the focus is or was on the Android and Samsung Pay users, and their usage and experience thus far.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

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27% of the Eligible Population is Using Mobile Payments

New York, NY):  Back in October of 2014, Apple Pay was launched with great fanfare, and for almost a year it was the only game in town for consumers who wanted to pay with their smartphones. Since then it’s been joined by Android Pay and Samsung Pay, with more branded mobile payment solutions, such as Walmart Pay and Chase Pay, waiting in the wings. But is anyone using them?

The answer, according to the latest Mobile Pay Tracker survey from Auriemma Group, is a qualified yes: about 7% of all smartphone owners* claim to have at least tried mobile payments. “It’s important to remember that less than half the smartphones that US consumers carry are capable of mobile payments,” says Marianne Berry, managing director of Auriemma’s Payment Insights practice. “Among those with an eligible phone, 27% of consumers we surveyed say that they have used Apple, Android, or Samsung Pay.”

However, that doesn’t mean they can leave their wallets at home yet.  Mobile pay users still put the lion’s share of their purchases on old-fashioned plastic, since stores that accept mobile payments are still hard to find in the US: 39% say they would use mobile payments more if more stores/apps accepted it. 61% say their mobile pay usage is supplanting cash transactions, suggesting that the phones are being used for smaller purchases, confirmed by average ticket size—-one-third of those who have used mobile pay in the past week made a purchase of $25 or less. These transactions are made both in-app and in-store, except for Samsung Pay, which has yet to offer in-app payments. On average, users report that 17% of their discretionary spending was done with mobile pay.

Even when they find a store that accepts mobile pay, only one-third of mobile pay users (31%) pay that way every time they know it is accepted, most frequently citing that they simply forgot. “Reaching for the phone instead of the wallet isn’t an automatic reflex, even for mobile pay enthusiasts,” said Berry. “And even if they do remember, many will give up and use their plastic cards if they encounter friction at the point of sale, particularly if there are other shoppers in line behind them.”

Mobile payments have been around for only a year, a fraction of the many decades that plastic cards have dominated. As the upgrade cycle puts the newest smartphones into the hands of more consumers, increasing numbers of them will have the opportunity to try out this new way of paying. “Overall satisfaction with mobile payments is quite high at 80%, despite complaints about low merchant penetration and inconsistent customer experience at point of sale,” Berry stated. “But mobile payment has yet to reach the tipping point that will take it from novelty to norm.”

Survey Methodology

The study was conducted online among 2004 consumers in the US with Apple Pay eligible (n=1,000), Android Pay eligible (n=838), and/or Samsung Pay eligible (n=327) smartphones between March 3 – April 7, 2016. Respondents were screened to own an iPhone 6/6+/6s/6s+ or Apple Watch (in combination with an iPhone 5/5C/5S) – a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5 – and/or other Android phone with KitKat (4.4) OS or newer.  All respondents also have a general purpose credit card in their own name. In addition to the quantitative web survey, twenty in-depth interviews (IDIs) were conducted March 21, 2016 – March 25, 2016 via telephone with Android Pay and Samsung Pay users recruited from the quantitative web survey. For this round of IDIs, the focus is or was on the Android and Samsung Pay users, and their usage and experience thus far.

* Auriemma conducted a standalone market sizing study in March 2016 among 1,100 US adults. Data was weighted by gender, age, race/ethnicity, household income, and education to be nationally representative of the entire US adult population (aged 18+).

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  For more information call (212) 323-7000.

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P2P Payments Used for More Than Check Splitting

(New York, NY): Person-to-person (P2P) payments are increasing in popularity and diversifying in use, with nearly one-third of consumers currently utilizing the service, according to recent research by Auriemma Group. The firm’s latest Cardbeat® surveys, among 800 US credit cardholders, found that users report several practical uses for P2P payments other than just splitting the check—many citing transaction speed and ease of use as reasons for the preference.

Users agree that P2P payment apps make it easier to pay people far away (94% agree), to keep track of money owed to friends and family (81%), and to split checks or bills (80%). “It isn’t just used to pay for your share at dinner anymore,” says Jaclyn Holmes, the Auriemma senior manager who directed the studies. “The ease of paying people far away suggests users may utilize P2P payments as an alternative to sending checks, money transfers, or providing account information to pay for goods or services.” P2P users also seem to enjoy flexibility in how they pay, with nearly one-half of users linking multiple accounts to a P2P app. Most users link credit rather than debit cards to their P2P apps, consistent with consumers’ preference for using credit cards for online purchases.

Among all respondents, familiarity was highest with PayPal Me (27%), Square Cash (17%), and Facebook (14%). While Venmo was the fourth most familiar among cardholders overall (12%), more than a quarter of Millennials (26%) cited familiarity with the brand. Those familiar with a P2P payment app commonly cite online advertising, word of mouth, and social media as how they first heard of the payment platform. “From a marketing standpoint, the very nature of P2P is that it encourages you to promote it to your friends,” said Marianne Berry, Managing Director of Auriemma’s Payment Insights team. “Users, by necessity, often bring other new users with them: more than two-thirds of users under age 35 reported that they’ve encouraged friends to sign up for a specific P2P app.”

These findings are consistent with a recent issue of Auriemma’s The Payments Report, a survey of 500 debit cardholders, which revealed that 85% of those who used at least one P2P payment app/service were at least somewhat likely to recommend the app/service to a friend. The study also found that 38% of the same population have used the service to pay someone other than a friend, suggesting that P2P payments are not simply just for splitting the bill at dinner, but may prove a more useful form of payment for those who prefer the method over cash or checks.

Survey Methodology
The studies were conducted online within the United States by an independent field service provider on behalf of Auriemma Consulting Group in September and November 2015, among 800 credit card users each (“cardholders”). The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

Complementary to our core consulting business, Auriemma facilitates a series of Industry Roundtable groups focused on a variety of industries in which clients exchange information through activities managed by Auriemma, comparing and analyzing industry practices and benchmarks so that each member can optimize its own performance.

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Apple Pay Use Growing in US

(New York): Apple Pay usage in the US is growing, driven by both increased frequency of transactions and the expanding base of iPhone 6 owners, according to Auriemma Group’s Apple Pay Tracker, which interviewed 500 iPhone 6 and 6+ owners between May 29 and June 15, 2015. Forty-two per cent of Apple 6/6+ owners reported having used Apple Pay, virtually identical to the proportions reported in two previous waves of the study conducted in February and April 2015. “While the proportion of users has remained stable, the denominator has grown through new iPhone and Apple Watch sales and the upgrade cycle. We’ve also seen the average number of transactions increase both in-store and in-app,” says Marianne Berry, Managing Director of Auriemma’s Payment Insights practice.

Data from the study indicates that users consider Apple Pay to be more than a novelty, Berry notes. “It’s not surprising that the first cohort to own the newest iPhone would be eager to try Apple Pay, so we were particularly interested in comparing trial to adoption rates. Eighty-four percent of Apple Pay users reported having made more than three transactions in stores, and 76% have used it more than three times in-app, suggesting that the abandon rate is low.”

The number of places where Apple Pay is used has also increased. In the April survey only 13% of Apple Pay users had used it in more than six stores, while two months later that number had grown to 24%. During the same two month period the number using Apple Pay for 6 or more apps grew from 1% to 10%.

“It’s likely that the number of retailers accepting Apple Pay will expand, especially as merchants hear from these customers and look at their purchasing power. Seventy per cent of Apple Pay users state that they are more likely to choose a store that accepts Apple Pay,” Berry says, “and this group is even more affluent than the overall Apple phone owner population.”

Indeed, one of the few complaints users have is a lack of opportunities to use Apple Pay. The effect is particularly notable in the burgeoning m-commerce market, as Apple Pay devotees have learned to search the App Store to find apps that accept the payment method. “It’s a rare instance of consumers starting out with a preferred payment method and searching for a place to spend it—like the proverbial hammer looking for a nail.”

Despite the enthusiasm of early adopters, Apple Pay sales volume accounts for only a tiny share of overall credit and debit card sales, and Berry doesn’t expect that to change quickly. “In the early days after launch, we found a high level of intent to use among those who hadn’t tried it yet. As more iPhone owners gain the ability to use the service through the upgrade cycle, we’re seeing a pretty stable proportion of about 30% who are taking a ‘wait-and-see’ attitude, often citing security concerns about a new technology. The introduction of Android Pay later this year may accelerate the evolution of perceptions about mobile payments moving from novelty to mainstream.”

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines. For more information, call (212) 323-7000.

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Apple Pay Use in US Steadily Increasing Beyond Early Adopters

(New York, NY): The use of mobile payments is continuing to grow and broaden, as nearly half (46%) of iPhone 6 owners have successfully used Apple Pay, up from 42% just two months ago. The latest wave of Auriemma Group’s bi-monthly Apple Pay Tracker, which interviews a fresh sample of 500 iPhone 6 owners every 8 weeks, also finds high levels of repeat usage, with 63% reporting that they use Apple Pay at least weekly.

“The Apple Pay base is broadening from the tech-savvy early adopters,” says Marianne Berry, Managing Director of Auriemma’s Payment Insights practice. In Wave 1 (conducted between January 26 – February 6, 2015), 70% of Apple Pay users identified themselves as people who “like to be the first to have the newest model phone.”  In Wave 2, conducted April 10-20, that figure had dropped to 55%, indicating that less tech-oriented types are now trialing mobile payments via Apple Pay.

Consistent with the finding that the newer users might be less technologically adept, a significant number are reporting problems in set-up.  The April survey found that 45% of respondents reported having issues setting up Apple Pay. “Among those who reported issues setting up Apple Pay, 62% acquired their iPhone in 2015, compared to 38% who got their iPhone in 2014,” Berry noted.

Despite these issues, user satisfaction is very high, and their main complaint is the lack of retail venues accepting Apple Pay.  67% of those that have used Apple Pay in a brick and mortar store say they are migrating to merchants that accept Apple Pay. And 51% say that they are using other payment methods, such as cash, less often since they began using Apple Pay.

“Mobile payments still comprise only a small fraction of overall payments volume,” said Berry, “but Apple Pay is the first service to garner double-digit numbers of users. As the upgrade cycle gives more consumers access to Apple Pay, and Android Pay comes to market, the long-awaited transformation of the payments industry may finally have begun. It will be interesting to see how US adoption patterns compare to those in the UK and in Canada—markets with higher penetration of NFC and contactless cards—when Apple Pay is rolled out there.”

Auriemma’s Apple Pay Tracker conducts an online survey of 500 randomly selected iPhone 6/6+ owners every 8 weeks, accompanied by qualitative telephone interviews; the full study is available through an annual subscription. Data reported above comes from interviews conducted April 10 -20, 2015.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

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Auriemma Launches Apple Pay Consumer Adoption Study

(New York, NY):  Auriemma Group announced Thursday the launch of Apple Pay Tracker, a longitudinal study that will monitor adoption and usage of the mobile wallet throughout 2015.

The study, comprising bimonthly surveys of 3,000 iPhone 6 and 6 Plus users over the course of the year, will illuminate Apple Pay’s impact on payment providers, retailers, and other industry stakeholders.

“Apple Pay may change where people shop, how they pay, and the overall balance sheet of the payments system,” said Marianne Berry, Managing Director of Auriemma’s Payment Insights practice. “Issuers, merchants, networks, investors—all need to monitor these changes and have the flexibility to respond immediately to challenges.”

Every eight weeks throughout 2015, subscribers will receive a report tracing current levels of Apple Pay activation and usage by a randomized sample of 500 iPhone 6 owners. In addition to measuring growth in the adoption curve, subscriber reports will include information gleaned from in-depth interviews with respondents detailing their reasons for adopting—or bypassing—the service. Each iteration of the research will examine a unique subset of users, ranging from early to mainstream adopters as the market matures. Interviews with respondents will explore:

  • Motivations for usage
  • Changes to behavior and purchasing habits
  • Impacts on the customer relationship and brand attribution
  • The role of social influences in adoption and usage
  • Perceived security benefits and concerns
  • User experience and likelihood to recommend Apple Pay to other

“There is intense interest in both the industry and mainstream media about Apple Pay,” Berry said. “While transaction volumes and other aggregate data will be widely reported, these statistics won’t explain the behavior driving the numbers.“For example, how much growth in transaction volume is being driven by regular users and how much is attributable to growth in iPhone 6 sales? Are consumers changing their choice of retailers depending on the availability of Apple Pay? Do consumers make a conscious choice at point of sale among the cards provisioned in their Passbook, or does the default card become the most frequently used?”

Apple Pay Tracker joins a suite of market intelligence and syndicated research studies offered by Auriemma’s Payment Insights practice. In addition to mobile payments, Auriemma conducts consumer research focused on credit, debit, and prepaid products.

“Whether or not Apple Pay reaches broad acceptance,” Berry said, “millions of consumers will pay with their phones for the first time. This may be the long-awaited catalyst that ignites mobile payments.”

 About Auriemma Consulting Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  For more information about Auriemma’s research, please call 212-323-7000.

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