September 10, 2015
Apple introduced Apple Pay on October 20, 2014. After almost one year, today Apple pay is one of the successful in-store payments systems in the world. Initially, there was a jitter among users and banks regarding contactless payments and the security, but today no one can shy away from the fact that Apple has done an exceptional job and has made contactless payments mainstream in the US.
When Apple Pay was introduced, it had three major card networks onboard: Visa, MasterCard and Amex.
In addition to American Express, Bank of America, Capital One Bank, Chase, Citi, Wells Fargo and others, more than 500 new banks from across the country signed on to Apple Pay. Apple pay was facing issues with retailers because of the Merchant Customer Exchange (MCX) which was developing CurrentC and realized Apple Pay to be a threat. When Apple Pay was introduced, only three dozen merchants accepted it. A few prominent retailers were McDonald’s, Macy’s, Chevron gas stations, Walgreens and Panera Bread.
How Apple Pay transformed from just a new product in the market to a successful payments system in just one year:
- In the first 72 hours of Apple Pay, Apple Pay saw over 1 million activations.
- Within one week after the launch, Amazon (the largest e-commerce player in the US) announced that it will add support for Apple Pay.
- Walgreens integrated Apple Pay and said that the in-store traffic at the chain had doubled since their integration with Apple Pay. Apple Pay amounted to 1% of all Whole Foods transactions in just 17 days.
- Staples, one of the world’s largest internet retailers, announced that its Staples App for iPhone has started supporting Apple Pay.
- After a month from the launch, Apple announced more merchants that had integrated Apple Pay: Associated Food Stores, Shaw’s Supermarkets, Jewel Osco, Harvey’s, Winn-Dixie, BI-LO, Albertson’s, Sephora and Instacart.
- By December, Apple Pay started getting support from more credit unions. American First Credit Union, L&N Federal Credit Union, UW Credit Union and M&T Bank joined the Apple Pay bandwagon. Apple Pay is now supported at 21 issuing banks in the US.
- By Christmas, 31+ banks, 50+ merchants, 25+ apps were with Apple Pay. The new financial institutions that were backing Apple Pay included SunTrust, Barclaycard, USAA, TD Bank North America and Commerce Bank.
- Meanwhile, another space was transforming rapidly due to a rapid increase in contactless payments through Apple Pay. That space was POS terminals. Large terminal manufacturers and startups were changing or upgrading merchant terminals so that they could accept Apple Pay.
- Major gas pumps started integrating Apple Pay for consumer convenience. With this move, Apple Pay started targeting a massive segment of day-to-day commuters.
- JetBlue became the first US airline to adopt Apple Pay. Passengers were able to pay for food and other premium items using Apple Pay.
- In only five months, Apple Pay tripled the number of major US merchants supporting it. 90 US banks, 58 apps and 47 merchants supported Apple Pay.
- In March 2015, Apple Pay announced that Apple Pay was accepted at 700,000 locations, including more than 2500 banking locations.
- RadPad, one of the leading end-to-end mobile rental marketplaces with 90 million renters, integrated Apple Pay. Lured by the exponential growth, independent merchants started accepting Apple Pay.
- Apple Pay already supported cards that represented roughly 90% of the credit card purchase volume in the US. In April 2015, Discover announced that it would soon integrate Apple Pay. That meant Apple Pay would support 100% of credit card purchases.
- Best Buy, which is a member of the retailer consortium MCX integrated Apple Pay, followed by Home Depot. These retailers wanted to give their customers as many options as possible for payments.
- The CEO of Target said that they were also planning to integrate Apple Pay.
- Another great move came in the month of June 2015. Apple announced the overseas expansion of Apple Pay. Apple Pay worked with 70% of credit and debit cards in the UK that included Halifax, Lloyds Bank and the Bank of Scotland; 250,000 locations in the UK started accepting Apple Pay since July. Major merchants and Transport for London (TfL) were onboard.
- Synchrony Financial became the first issuer to offer private label credit cardholders the ability to add their cards to Apple Pay.
- Apple Pay said that it would be accepted at 1.5 million locations in the US by the end of 2015.
- Another MCX merchant, Rite Aid started accepting Apple Pay in the US.
- ANB bank became the first local bank in the US to accept Apple Pay.
The latest update from Apple is that Discover cardholders will be able to use Apple Pay from September 16 with iOS9. Discover Card is the third-largest credit card brand in the United States. To lure its users to use more Apple Pay, Discover will be offering 10% cash-back up to $10,000 of in-store purchases until the end of the year. Some Discover cardholders will enjoy an extra 10 miles per dollar up to $10,000 of in-store purchases.
Apple has done an exceptional job in making contactless payments mainstream, but it still has a long way to go. It will be more interesting to watch whether the dream run continues in the upcoming years.