A new study of public requests for more NFC-based mobile wallet options when paying has found that Apple Pay is by far the most-requested “tap to pay” option, and that consumers are accelerating their demands for mobile-payment options at the places they shop in the US — which will be good news for all “e-wallet” vendors. The poll, conducted by analyst firm Piper Jaffray, asked 507 resellers and independent software merchants about mobile payment technology options. Apple Pay, Apple’s official NFC payment option, was supported by 67 percent of the 507 merchants and vendors polled. About 16 percent also mentioned wanting to support Google’s option, Android Pay, with previous US e-wallet payment leader PayPal mentioned by eight percent, and Samsung Pay getting seven percent support. Regardless of merchant preference, contactless card and NFC payment systems will actually (and largely automatically) support all four system equally.
One of the main problems with getting wider support for Apple Pay and NFC-based payment solutions already has been a slow merchant response to upgrading store payment systems to accept them. This is beginning to change, along with the issuance by US banks of mandated, more-secure EMV-style bank cards that use a “chip-and-PIN” type system. The most popular terminals that are compatible with EMVs also generally support “contactless” cards, and NFC-based payment systems.
Because the entire processing and approval “back end” of such systems works directly with payment processors, merchants need do almost nothing apart from activating the NFC compatibility in the terminals in order to support systems like Android Pay. In countries outside the US, where EMV terminals are the norm and have been for almost a decade, most stores support Apple Pay (using a support US, UK, or Chinese payment card) whether they are aware of it or not.
In addition, American Express (and now MasterCard) have started doing “end runs” around reticent banking systems in Canada, Australia, and other countries by activating Apple Pay support on their own badged EMV cards. Both the Amex and MC programs are expected to expand to several other countries over the course of 2016. In the US, Apple has been hugely successful at getting banks to support Apple Pay (with over 1,000 institutions now offering it in their latest EMV debit and credit cards), and merchants will be required to more widely support EMV cards as the year rolls on, increasing compatibility with NFC-based “tap to pay” systems. Currently, Apple reports about two million compatible points of sale.
Analyst Gene Munster cited the study in a note to investors that cautioned that while the news is good for Apple, clients should not expect it to make a significant material difference to the company’s bottom line. “Apple Pay’s significance is an engagement tool, which longer term is a must-have for any successful phone as cash slowly goes away,” he wrote, saying that the service is more about adding to ecosystem lock-in than directly increasing revenue, but the intangible effects of services like Apple Pay are substantial.
“We believe it is telling that PayPal, who has been the leader in digital payments, so significantly under-indexed Apple Pay and Android Pay,” he added, noting that all mobile payment systems would benefit from wider NFC adoption, but Apple in particular has come to dominate the branding of “e-wallets.”
Apple Pay is available for the Apple Watch (independently of the iPhone, though cards can only be entered through the phone), and the iPhone 6 or later for in-store purchases. Some rival systems, such as the long-threatened but still non-existent CurrentC option favored by Walmart and some other merchants, offer alternatives that work with a wider variety of phones, or use a QR code-based system to avoid having to tie fingerprint security in, and other options.
