Can Apple Get Shoppers to Pay by Phone?

This could take a while.

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According to a new poll by, U.S. consumers still aren’t warming up to the concept of making payments using their mobile phones. That’s bad news for Apple Inc. (NASDAQ:AAPL) and its play in the space, Apple Pay. surveyed 1,000 adults and asked them about their hypothetical willingness to use their phones as payment devices. The same poll was conducted six months ago in September, before the rollout of Apple Pay.

The numbers were little-changed and demonstrate discomfort with the sort of payment technology AAPL is betting on:


Apple isn’t the only company counting on mobile payments to take off. Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL) has Google Wallet, Samsung Electronics (OTCMKTS:SSNLF) has Samsung Pay, and eBay Inc (NASDAQ:EBAY) has PayPal.

But AAPL stock may have the most to gain from widespread adoption of mobile payments, especially considering the rapid adoption of Apple Pay, which already accounts for two out of every three dollars spent on contactless payment systems (these are systems where the card does not have to be swiped through a card reader). If nearly two-thirds of Americans say they would “never” or “hardly ever” use their phones as credit cards given the chance, that’s a big market AAPL is missing out on.

Why is two-thirds the population still so hesitant to embrace mobile payments?

Consumers have “questions about convenience and security,” says Matt Schulz, senior industry analyst at He also notes that consumers don’t feel terribly inconvenienced by pulling a plastic credit card from their wallet.

As for security, that is a valid concern. Apple Pay is currently sorting through a spate of early fraud issues. Some banks are marking as much as 6% of transaction volumes as fraudulent. Plastic cards tend to see a number closer to 0.1%.

Although AAPL software isn’t the main culprit in this case — many card issuers made it too easy to add someone else’s credit card info into Apple Pay — the negative headlines don’t help Apple’s cause.

Looking on the Bright Side

What AAPL has going for it, however, is the sheer size of the market. Extrapolating from the poll results, if it can capture the bulk of the one-third of Americans (over 100 million people) who are open to mobile payments, then transaction volume will keep rising as more Apple users upgrade to the iPhone 6 and other Apple Pay-compatible models that follow.

Plus, the poll found that senior citizens are warming to the idea of paying by phone. As more baby boomers approach retirement age, the graying of America should play into AAPL’s hands. In the past six months alone, the percentage of people 65 and older who said they would never use cellphones routinely for payments fell to 52% from 64%.

Although mobile payments haven’t captured the hearts and minds of most Americans, the current market’s big enough for AAPL to make a buck or two. While mobile payments were responsible for just 2% of U.S. retail sales in 2014, 2% of $3.2 trillion is a still-impressive $64 billion.

Apple’s first-mover advantage in the payment space should go a long way in the battle for market share. And I expect the resistance to mobile payments to start ticking down over time as more people try it.

As of this writing John Divine was long shares of AAPL stock, GOOG stock, and GOOGL stock. You can follow him on Twitter at @divinebizkid or email him at

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