Apple Pay Awareness, Adoption Plateau According to First Annapolis Survey

February 11, 2016

First Annapolis Survey of Mobile/Alternative Payments Usage and Awareness Finds High Energy and Excitement About Mobile Payments, But Few Regular Users of Apple Pay

ANNAPOLIS, MARYLAND: First Annapolis Consulting, Inc. is pleased to release findings from a consumer survey on U.S. mobile payments. In December 2015, 580 iPhone 6 users were interviewed, as part of a total sample of approximately 1,300 household financial decision-makers and smartphone users, about general consumer payments usage and awareness. (More detail on the survey can be found here.)

Awareness of Apple Pay is quite high. Among all survey respondents, 73% have heard of Apple Pay, while awareness jumps up to 84% for the sub-group of iPhone 6 owners. “Awareness among iPhone 6 users is down slightly from 88% in our Spring 2015 survey, though still within the survey’s margin of error. Apple has done an excellent job of promoting Apple Pay since its launch in October of 2014,” said Hugh Gallagher, a Principal at First Annapolis. “High awareness is a necessary but not sufficient condition for the success of a new payment service such as Apple Pay.”

20% of iPhone 6 owners reported adopting Apple Pay (i.e., having used the service at least once), down from 22% in the Spring survey but also still within the survey’s margin of error. Among those that have adopted Apple Pay, only 15% say they use it regularly or frequently (i.e., more than once per month), compared to 19% in the Spring survey. On average, Apple Pay users have loaded 2.3 cards into their Apple Wallet; 75% of cards loaded were general-purpose payment cards (41% credit, 30% debit, 4% prepaid), while 25% were proprietary retail store or loyalty cards which Apple began enabling only in the second half of 2015.

Despite relatively few NFC-enabled terminals in the market, the physical point of sale remains the primary channel for Apple Pay purchases. Among those that have used Apple Pay, 66% reported having made a purchase in-store, while 52% reported having made an in-app purchase.

“At this point in time, the typical financial institution can expect 1 to 2% of cardholders to use Apple Pay two or more times, based on the survey results and Apple’s share of the U.S. handset market,” said Gallagher. “This represents positive momentum for the evolution of the U.S. mobile payments market, but it also suggests a long adoption curve. Despite different stakeholder interests and mobile-related initiatives, most signs point to long-term success.”

Among those that have used Apple Pay, 60% indicated that they are “very satisfied” with their experience and 94% are at least “somewhat satisfied”. Perhaps most importantly – no consumer indicated any level of dissatisfaction with Apple Pay. “This satisfaction may very well translate into preference, which is a hallmark of the Apple franchise,” Gallagher said.

“These research results demonstrate that Apple Pay has had a moderately successful launch, with low consumer usage but positive customer experiences to date. The latter represents an important first step towards longer-term adoption. While early adoption of Apple Pay may not be as high as expected — and appears to have plateaued since the initial launch in October, 2014 — usage is likely to continue to increase with the proliferation of other mobile payment solutions (e.g., Android Pay, Samsung Pay, CurrentC, Chase Pay, etc.) which should expand the merchant acceptance base and broaden the availability and visibility of mobile payments in general,” Gallagher concluded.

For more information, please contact:
Hugh Gallagher, Principal
(410) 855-8566
Lee Manfred, Partner
(410) 855-8519

About First Annapolis Consulting:
First Annapolis is a management consulting and M&A advisory firm focusing on the financial services industry, particularly in payment-related products, services, and delivery. Our clients include U.S. and international financial institutions, payment networks, service providers, retailers, affinity groups, manufacturers, trade associations, and government agencies. We offer a full range of services including strategy development, program management, portfolio/risk management, commercial risk management and compliance, and marketing support/execution in areas such as product design, rewards/loyalty program development, and customer segmentation. First Annapolis also offers a suite of specialized M&A advisory services that complements our consulting practice. For more information, visit www.firstannapolis.com, LinkedIn, and @FirstAnnapolis.