The pandemic of 2020 has changed the way many businesses operate, including broadening the use of contactless payments in order to reduce or eliminate the potential for spreading Covid-19. One such contactless payment option that has seen incredible growth is Apple Pay. It’s likely you may have noticed the option the last time you drove through Starbucks, McDonald’s, or Taco Bell.
If you’re a merchant or service provider looking to expand the payment options that your business accepts, it makes sense to consider the popularity of Apple Pay. It could attract a new demographic of customers to your business as it’s a prime payment choice for Millennials and those that prefer contactless payments. If you choose to go with Apple Pay, then read further to learn more about how to accept it.
What is Apple Pay?
Apple Pay, Apple’s digital wallet, was first introduced in September 2014 as a collaborative effort between Apple, Visa, MasterCard, and American Express. Prior to joining forces, Apple and these three major credit card companies had each been trying separately to develop a payment method that would replace the traditional credit card payment system with single-use digital “tokens.”
The goal of this idea was to simplify the payment process while also reducing the fraud potential inherent with exposing personal data and account numbers to merchants and employees via the handling of credit cards. Apple Pay accomplishes this by replacing credit card account information with a digital token that’s exchanged between a user’s Apple device and a merchant’s Point of Sale (POS) system by simply holding the two devices in close proximity. The process of creating the unique digital token is referred to as tokenization. In addition to enhancing account security, mobile payments are simply faster than cash or credit card payments. A simple and speedy checkout reduces payment hassle for the customer which is bound to reflect positively on one’s business.
Overall, it has come a long way since 2014, it’s now accepted at most prominent major retail outlets. You can find the Apple Pay option at stores such as Costco, Kohl’s, Staples, and Walgreens. Chevron accepts Apple Pay for fuel purchases, and even the posh department store, Bloomingdale’s has chosen it as its contactless payment option.
Apple Pay 2014 Roll Out
Initial Apple Pay results are in and leading independent research brokers are reporting that using Apple Pay may be able to revive mobile payments, as they have other seemingly dead technologies. The ITG Mobile Payments report shows that Apple Pay comprised 1 percent of digital payment dollars in November alone. The horses are out of the gate.
It may seem like 1 percent is not a lot, but it’s pretty impressive considering that the only people with access to Apple Pay are iPhone 6 users and very few merchants accept this payment method. However, it’s still pretty early for widespread acceptance, even for an Apple product.
In comparison, this November Google Wallet payment made up only 4 percent of digital payment dollars, and that was launched in 2011. Some are speculating that this may be moving in on PayPal’s turf, as it is a major player in the mobile payment space. Around 60 percent of new Apple Pay customers used the payment platform several times through November. However, only 20 percent of new PayPal customers used it several times that month.
The top five Apple retailers so far have been Whole Foods (20 percent of transactions), Walgreens (19 percent), McDonald’s (11 percent), Panera Bread (6 percent), and Subway (3 percent). Together these five companies comprise 58 percent of Apple Pay transactions, and 45 percent of dollar spent via the mobile payment app.
Small business owners have not been in a hurry to get on the bandwagon, as it has also largely passed on previous NFC payment systems. Although this is a growing technology, there is still a very small portion of consumers using Apple Pay and the equipment can be expensive, so it is not always a good ROI move for small businesses. However, with EMV implementation this year, 2015 may be the year your business rethinks how it accepts payments, and the Apple Pay results are proof of that.