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Apple Pay growth slows as challengers rev up

People continue to sign up for iPhone maker's mobile payments service, but at a slower clip, research shows. Meanwhile, megabank JPMorgan Chase is prepping a system of its own.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
3 min read

Apple Pay's adoption rate is slowing as it continues to try signing up more retailers.


The adoption of Apple Pay seems to have lost its initial head of steam.

Launched a year ago, Apple Pay lets consumers use their smartphones to pay for goods on the go at supported retailers.

While the number of people signing up has continued to rise, the overall growth rate has dipped, according to research unveiled by Phoenix Marketing International on Monday.

A total of 14 percent of US households with credit cards had signed up for Apple Pay by the end of September, according to Phoenix. That compares with 11 percent in February, representing a brisk clip for the first four months the service was available.

Apple has recruited a long list of banks and credit card companies to support Apple Pay, but it still faces challenges getting retailers to jump on board, which could be dampening consumers' enthusiasm. Meanwhile, rival services Android Pay and Samsung Pay hit the US market in September. Samsung Pay doesn't require the same NFC (near-field communications) technology needed by Apple Pay and can work with any magnetic-strip card reader, making for greater appeal to merchants. NFC is a mobile technology that lets a smartphone handle payments where retailers have the right gear in place.

On Tuesday, Samsung announced that in bringing Samsung Pay to the US it's working with the four major credit card companies as well as several major banks. Looking at consumers who have used Samsung Pay since its US launch a month ago, the company said that an average of eight transactions per user is a "strong indication" of repeat usage.

There's also a new contender getting ready for action. In mid-2016, megabank JPMorgan Chase is set to unveil its own payments service known as Chase Pay.

Chase Pay will work with both iPhones and Android phones. It will use barcode technology for scanning payments, a process that's slower but more common than the NFC-based transactions used on Apple and Android devices. Further, Chase Pay will initially be available only for consumers with Chase credit, debit and prepaid cards with no plans as of yet to expand it it non-Chase users, a Chase spokesman said.

In its study, Phoenix found that Apple Pay users wanted to pay for items with the service, but nearly half said they have visited stores that didn't support it. A majority of Apple Pay users continue to experience problems at the point of sale, including terminals that take too long to use, terminals that don't work properly and cashiers unable to help, Phoenix said.

Among 15,000 people surveyed by Phoenix over the past year, around 48 percent in their mid-30s to mid-50s and 42 percent of those 21 to 34 said they use Apple Pay. Among those who use the payments service, 86 percent have linked their credit cards to Apple Pay, 49 percent use their debit cards and 22 percent use various types of prepaid cards, Phoenix said.

Apple declined to comment Tuesday but pointed to an earlier statement in which it touted "double-digit monthly growth in Apple Pay transactions" since its launch on October 20, 2014. At a conference earlier this month, the company also talked up the growth in Apple Pay among retailers.

"I have to say in the last year of working on Apple Pay, we've seen a sea change in momentum around acceptance at the merchant level," Jennifer Bailey, vice president of Apple Pay said at the Code Mobile conference. She also said that about 80 percent of Apple Watch owners "very actively" use the payments service.

It is getting tried out. Apple Pay is being used for 68 percent of all mobile payments in US stores, according to the 2015 North America Consumer Digital Payments Survey report released last week by consulting firm Accenture.

Reuters earlier reported on the Phoenix study.