Apple Inc.’s (AAPL) Apple Pay was a flop in Black Friday shopping, casting doubt on the mobile wallet’s potential to drive AAPL stock one day — not to mention the entire future of mobile digital payments.
Digital wallets like Apple Pay are supposed to be one of the next big things in tech. That’s what companies such as PayPal (PYPL), Facebook (FB), Square (SQ) and Alphabet’s (GOOGL) Google, among others, are all scrambling to emerge as the dominant player in the digital payments business.
Indeed, an analysis by Accenture shows that cash, credit and debit card payments add up to about $13 trillion annually. The digital payments market is already growing at a healthy clip — as much as 8% per year, according to industry reports. If just a small percentage of those $13 trillion in transactions move to digital, this market will explode.
Forecasters say mobile wallets are already off to a good start. Consumers are expected to make more than $140 billion in mobile payments by the end of the decade, according to Forrester, a market research and consulting firm.
But the latest Black Friday figures suggest that figure might be a tad over-optimistic.
The key problem with digital payments — especially mobile digital payments like Apple Pay — is that they don’t really solve a problem or fulfill a need. After all, consumers don’t find reaching for their cash or cards to be so inconvenient that they’re clamoring for an alternative.
Apple Pay Goes MIA
That reality was very much in evidence on Black Friday when almost no one used mobile wallets, according to a report by market researcher InfoScout. (Hat tip to Quartz.)
Sure, services like Apple Pay and Android Pay are still in their infancies — and the InfoScout data are hardly comprehensive — but there’s no denying digital mobile payments went missing at the start of the holiday selling season.
In the case of the much-hyped Apple Pay, InfoScout said the mobile wallet had it’s lowest usage rate since the researcher starting tracking it, being used for only 2.7% of Apple Pay-eligible transactions.
That is not very reassuring news. As Quartz notes:
“[T]he data from InfoScout is surprising, considering Apple has continued to market the service heavily and has steadily added retail partners, including Best Buy and Kohl’s. In addition, Apple Pay is now available on the iPhone 6S, 6S+, 6, 6+, and the Apple Watch. Given all those developments, it would be reasonable to expect greater usage of Apple Pay this holiday season, but it looks like consumers are still much more comfortable pulling out their credit cards than waving their iPhones.”
It’s far, far too soon to call Apple Pay and other mobile digital payment services a bunch of duds. At the same time, it’s also far too soon to expect Apple Pay to do anything material for operating earnings or AAPL stock.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
