Apple Pay’s Recent Moves Bode Well For In-Store Payments

As featured in PaymentsSource on August 17th, 2018.


As of March, Apple Pay had crossed $1 billion in annual volume and doubled its user base to 127 million over last 12 months. Meanwhile, Apple Pay is accepted at one in two U.S. stores today, representing millions of locations — an achievement just four years after its launch.

Though the company has not provided any breakdown of its transaction volume by channels, an Apple Pay users enjoy great convenience through a quicker checkout when shopping in an in-app or online environment rather than filling out a payment form or logging into a merchant’s website. So, they have been using it frequently.

When it comes to enabling payment in physical stores, Apple Pay has been struggling to deliver a tempting value proposition to consumers.

The debate continues over whether tapping iPhone for Apple Pay is more convenient than inserting a chip card. Most of the Apple Pay users make in-store purchases without Apple Pay. Even I end up paying at Starbucks today using the coffee chain’s mobile app instead of tapping Apple Pay on my iPhone X — and I paved the road for NFC mobile payments over 2002-2012 and was known as Mr. NFC in those days. Clearly, a distinct value must be missing.

Things may be ready to change, as Apple has been trying to find good reasons for its users to use Apple Pay for in-store purchases. It has started to make limited-time, exclusive offers in San Francisco to engage iPhone users frequently in over 100 local shops: 20% off at Small Frys, 30% at Rosamunde Sausage Grill, $15 off at a Mexican restaurant, the Little Chihuahua. By driving Apple phone user traffic to participating stores and restaurants through these offers, the company is incentivizing them to use Apple Pay.

Apple has successfully made promotions with the brand retail chains to drive the use of Apple Pay for the online/in-app purchases. From time to time Apple continues to make limited-time offers with dozens of brands, including Jet, Adidas, Nike, Fandango, Under Armor, Lululemon, TGI Fridays, Hotels.Com, Fenzi, GOAT app, Hot Wire and Saks Fifth Avenue.

It’s good to see Apple has expanded its Apple Pay promotions program to local stores in San Francisco. Hopefully, it will soon roll out the initiative to other major cities.

Apple Pay Cash could be an interesting value proposition for a younger-generation user who prefers not to use credit cards, does not carry a debit card, sends money to each other electronically, likes to split payment with friends for meals in restaurants, and would preferably also pay electronically in physical stores.

Finally, younger iPhone users have a choice to use Apple Pay Cash to pay at millions of physical stores nationwide, send or receive money using Messages or in Siri, and split tender with friends. It’s also a great proposition for parents who can instantly send money to their children going to school in another city, so they can use it right away for purchases at the bookstore, meals at restaurants and for other purchasing at or around their campus.

Mohammad Khan

Mohammad Kahn is cofounder and president of Omnyway.