Blog article
See all stories »

The impact of the Apple Watch on Apple Pay on In-store payments?

With the launch of the Apple Watch on the 24th April and its support for Apple Pay, one question is; “Will customers prefer the Apple Watch over the iPhone 6 for in-store Apple Pay purchasing?”

A survey of iPhone 6 consumers in the US indicates that Apple Pay is not an instinctive action[1] for in-store payments. The survey shows consumers are trying Apple Pay for in-store payments but a significant number are only using it once. The FED in its ‘Consumers and Mobile Financial Services Report’[2], published in March, indicates that US mobile consumers are currently happy to access their accounts and pay via their mobile device for remote payments but may not be ready for in-store payments.  This finding is confirmed in a report from[3] showing the popularity of Apple Pay in-app remote payments.  The Apple Pay in-app payment experience is simpler and is easily used by consumers and retailers. 

My belief is that the current iPhone 6 in-store Apple Pay process in the US does not benefit consumers and retailers enough in terms of speed, convenience and security.

Perhaps we should consider whether the Apple Watch will improve the Apple Pay experience in-store for consumers?  The payment process in-store is simpler and should be more popular, if consumers remember to sync their Apple Watch for payments each day. 

Contactless debit and credit card payments are happening in other markets around the world.  We are seeing the fastest rate of adoption in markets where the consumer taps their contactless device and then enters their online PIN[4], if the retailer requires it.  This contactless transaction model works for consumers and potentially it could be adopted by Apple Pay in the US. 

The issue is then will the US payments ecosystem change to PIN at POS for all cards?  The prize is potentially very large as the expected deployment curve is estimated by Mercator to be 53 million devices in the US by end of 2015[5].

My predictions are that:

  1. Apple and the card schemes in the US will alter the contactless transaction flows to simplify the user experience and support a more secure provisioning process for issuers[6].
  2. Apple Pay in-store acceptance will have the fastest adoption curve in contactless markets with online PIN.
  3. Apple Pay will evolve to integrate iBeacon technology to further simplify the payment experience with the iPhone.



[2] -







Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 08 May, 2015, 11:19Be the first to give this comment the thumbs up 0 likes

I've long argued that instore mobile payments are solving a non-existent problem. But, in my blog post on Apple Pay (, I'd assumed that its emphasis on security will help Apple Pay succeed where other mobile wallets have failed. I guess that accounted for the first time use of Apple Pay reported in your article. Beyond that, I'm afraid what I predicted in my post has come true: "However, people have short memories and I wonder if better security alone will be enough to convert even the most zealous FanBoy or FanGal from plastic to mobile payment."

Use of fingerprint on iPhone6 to authenticate an Apple Pay transaction is one of the drivers for its adoption in a market that places a premium on a frictionless experience. From what I know, Apple Watch lacks a fingerprint reader. So, I don't see it increasing Apple Pay adoption. PIN may have happened in Europe 10 years ago, India 1 year ago but I don't see it happening in USA for at least another 10 years: According to recent reports, even the first phase of Chip+Signature is likely to take that long. And, ironically, the rise of Apple Pay was cited in one such report as being one of the major reasons for the slowdown in adoption of Chip + Signature in USA!

Now hiring