Apple Pay – A User’s Perspective

Navigator Edition: November 2014
By: Bob Rohr

The much-anticipated Apple Pay is live. First Annapolis has tested the platform extensively from the user’s viewpoint. Card set-up, card activation, and in-store experience were observed, with the goal of comparing Apple Pay to traditional card buying.

Card Set-up and Activation:

Adding cards to Passbook was largely a seamless process, with pre-loaded iTunes cards the easiest to load by simply confirming the CVV. Adding additional cards was a mixed bag. Most issuers required a text message or a phone call as an additional validation step after entering card details, while other (and in some cases the same) issuers required no additional verification. Those who verified by phone were placed in the issuer’s standard VRU queue as no “direct Apple Pay activation” line was established.

Figure 1: Apple Pay POS Use Cases and Results
fig-1_-Apple-Pay-POS-Use-Cases-and-ResultsSource: First Annapolis Consulting research and analysis.

In-Store Experience:

First Annapolis tested transactions at a range of merchant categories using different customer authentication methods.

In general, customer authentication has not changed due to Apple Pay. Existing merchant no signature floor limits and preferred routing methods are similar for Apple Pay and traditional card payments. While Touch ID is an additional authentication method, our tests showed that it does not let the user bypass traditional signature or PIN customer verification. This begs the question, “Why use Apple Pay if I still need to provide a PIN or signature?”

To help answer the question, we evaluated Apple Pay on four criteria: Speed; Reliability; Simplicity/Convenience; and Security (“Acceptance” was not included in the analysis).

Figure 2: Apple Pay Framework – Users Perspective

This analysis assumes a comparison of Apple Pay vs. traditional credit/debit cards at Apple Pay accepting merchants with Apple Pay compatible credit/debit cards.
Rankings are based on the author’s judgment and qualitative observations.  Quantifiable metrics such as total transaction time or seconds until authorization were not gathered.  
Source: First Annapolis Consulting research and analysis.

Key observations include:

  • Speed: Apple Pay enables a faster, less cumbersome transaction. In swift motions, a user can authenticate the transaction through Touch ID and then replace the phone securely in pocket/bag, often with the use of only one hand.  In addition, the processing and authorization speed is comparable to traditional card transactions.
  • Reliability: All use case transactions were processed and authorized seamlessly and comparable to traditional card transactions; however, in a few use cases merchants were unfamiliar with the process, producing awkward interactions. These issues will likely be remedied as merchants become more familiar with Apple Pay.
  • Simplicity/Convenience: Both forms of payment are simple, convenient, and largely undifferentiated in terms of ease of use. Both require a simple customer action and motion.
  • Security: Apple Pay is a more secure transaction. A physical wallet is left securely in a pocket/bag and the card account number is never visible nor displayed on the receipt. Instead, the last few digits of the iPhone’s device account number are displayed.

Summary Results:

Apple Pay is an elegant transaction from the user’s standpoint; however, acceptance at users’ favorite retailers is critical for sustained success, as it’s currently accepted at only a handful of merchants covering ~220,000 terminals.  For now, enjoy the faster, more secure payment method but don’t forget your wallet at home.

For more information, please contact Bob Rohr, Senior Consultant, member of the Deposit Access Practice, specializing in Debit and Prepaid,

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