Apple Pay: The challenge of attracting active users

mobilepaymentstoday.com/

By Maxime de Nanclas, COO and co-founder of, Mobeewave
The endurance of any mobile wallet depends on active users: people who embrace a technology and use it to carry out multiple transactions each day. Not only do they drive transaction volume, they also provide an indication of genuine behavioral change on the part of the consumer.
That said, the initial adoption of Apple Pay has been good since it was released in the U.S. almost two years ago. Tim Cook said in April that "Apple Pay is growing at a tremendous rate." He added that the service’s transaction volume increased fivefold in a year and that it was gaining 1 million new users per week. But keep in mind Apple has yet to reveal any specific numbers regarding Apple Pay.
In July, Cook trumpted Apple Pay as the leader in contactless payments in the U.S. With 3 million retail locations nationwide now accepting Apple Pay, the mobile wallet accounted for 75 percent of the contactless payments. These numbers, however, appear less significant when you consider there are roughly 13 million POS terminals in the U.S., meaning Apple Pay can still only be used in less than a quarter of retail locations.    
Research conducted by Auriemma Consulting on the use of Apple Pay, Android Pay and Samsung Pay suggests that these mobile wallets are not exactly thriving. The consulting group found that even when consumers find a store that accepts mobile pay, only one third of U.S. mobile pay users use that method every time they know it is accepted, most frequently citing that they simply forgot. Apple Pay users reported more difficulty using that system at 31 percent compared to 19 percent of Samsung Pay users.
There are also indications that Apple Pay still only represents a mere fraction of total payment volume.
Timetric estimated Apple Pay accounted for $10.9 billion in transaction processed worldwide in 2015, with the bulk of that volume coming from the U.S. That figure equates to only 0.2 percent of the total in-store retail volume in the U.S.
These statistics suggest that Apple Pay’s lack of active users simply boils down to a question of value. At present, this mobile wallet really doesn’t offer a significant benefit to motivate consumers to pay with it rather than plastic.
Making a mobile wallet top of mind
Mobile wallet providers have begun to incorporate additional elements to entice active users. For example, Android Pay, Apple Pay and Samsung Pay now support card-free ATM transactions at certain Bank of America machines.
The same companies also are leveraging retailer reward programs. A July 2016 survey by Urban Airship suggests that this could potentially drive mobile payments. According to Urban Airship’s Judy Chan: "While a slight majority of respondents are interested in using mobile payments (23 percent having already used them), nearly three-quarters of consumers will use mobile payments if loyalty rewards and offers are automatically applied."  
Collaborating with public transit systems is another tactic for making mobile wallets a greater part of people’s daily lives. Commuters have been able to use Apple Pay on the London Underground since July 2015.
The impact of these advances remains to be seen. Despite adopting all of these approaches, Apple Pay is still struggling to gain active users.
Attracting active users through in-person money collection
As the recent Visa/PayPal announcement demonstrates, financial services and payment technology companies are striving to complete the loop between digital, physical, personal and commercial payment.
Offering consumers the ability to accept money in person via contactless transactions could be the last piece of the puzzle. This would enable mobile wallet providers to introduce a viable cash displacement solution and entice active users by opening up new use cases.  
By harnessing a smartphone’s NFC capability and secure element, it enables consumers to securely accept money from a contactless card or mobile wallet.
And by providing a digital alternative to cash transactions – which represented a staggering 40 percent of all U.S. transactions in 2013 – this feature, when incorporated into mobile wallets, would increase the role of these products in consumers' everyday lives. In practical terms, it would significantly expand the number of times a consumer would use their mobile wallet to also include occasions when they need to get paid. In this way, offering value for the consumer beyond simply paying at the physical point of sale could hold the key for attracting more active users.