The Toughest (And Most Important) Mountain That Apple Pay Must Climb

Apple Pay hasn’t exactly taken the world by storm.

Sure, there has been a lot of hype, but that hasn’t translated into users. Even as Apple announced new updates to the much-ballyhooed mobile payments system, it was abundantly clear that Apple Pay – like every other mobile payment tool– still has a long way to go to hit critical mass.

At its Worldwide Developers Conference last week, the company announced that Apple Pay would soon be compatible with some retail credit cards and even some loyalty cards. It will only work with a select few retailers at first, but the addition of these types of cards is an important small step in the continuing evolution of Apple Pay.

It isn’t a cure-all, though. Apple Pay still has many issues that it needs to overcome, including:

  • Too few people believe it is secure: Put simply, the public isn’t convinced that Apple Pay is safe. They’re still leery about the safety of mobile payments in this age of data breaches and ID theft. All of the advanced technology (tokenization, thumbprint verification and a secure storage element) that has gone into the iPhone 6 and Apple Pay haven’t helped erase the average consumer’s perception that mobile payments just aren’t as safe as using plastic. Recent hacking headlines certainly haven’t helped Apple’s cause either.
  • Too few people can use it: Only those with the iPhone 6 or 6 Plus can use Apple Pay. Even if you have one of those phones, it can be difficult to find a retailer that accepts Apple Pay. The good news is that merchants throughout the country are upgrading their point-of-sale terminals to accept EMV (or smart chip) credit cards, and most of those new terminals will also feature Near Field Communications technology, which is what is required to work with Apple Pay and other mobile wallets. That means that we should see a big jump in mobile wallet acceptance in the near future. Today, however, it’s still an issue.
  • Too few cards are compatible: Again, this one will change as the years pass, as last week’s announcement proved. (Discover will soon work with Apple Pay, and more and more retailers and banks will come in to the fold eventually, too.) The process will be slow, however. And there have still been no announced plans to integrate small business credit cards or corporate credit cards into the mix, so business travelers will have to wait to be able to use Apple Pay on work trips.

All of these issues are significant and absolutely must be addressed if Apple Pay is going to grow into the ubiquitous juggernaut that some expect. Surely, the smart folks at Apple are working tirelessly to fix each of them now, and I’m confident that they can and probably will fix them.

(Full disclosure: I have an iPhone 6 and use Apple Pay when I can. I actually think it’s very convenient and easy once it is set up.)

Here’s the thing, though: None of those are the biggest problem Apple Pay faces. Yes, the security perception issue is huge, but once more and more people understand the safety measures that Apple has taken – and the fact that mobile payments come with all the same zero-liability coverage and other consumer protections that a plastic card does – those worries will subside. The equipment issues and card compatibility concerns should eventually fade, too. When it comes to the biggest obstacle that faces Apple Pay, I’m not so confident, though.

The hardest mountain for Apple to climb and the most important one is this: Most people still don’t see why they should bother with mobile payments when their good old plastic credit card is easy and works just fine.

A survey in March found that 43 percent of Americans said they would never use their cellphone to make in-person purchases. Another 21 percent said they’d hardly ever do it, meaning that nearly two-thirds of Americans (64 percent) just aren’t very interested in mobile payments. Those numbers were largely unchanged from when the poll was first done, six months earlier.

People want two main things from mobile payments: security and convenience. If Apple Pay, Google Wallet or any other mobile payment system isn’t at least as safe and as convenient as a plastic credit card, people won’t switch. It’s as simple as that.

Adding loyalty cards into the mix will help with the convenience issue by eliminating yet another card that the consumer has to carry when they go to the store. It also helps ensure the customer gets all the rewards points they have earned.

Is that enough to make people embrace mobile payments?

No, but it’s also important to view this as an evolving system rather than a finished product. Security will keep improving, more types of cards will be able to be used and more merchants will buy in. It also seems likely that rewards will play a larger and larger role. (One possibility: giving discounts or extra rewards points to those who made purchases using mobile payments.)

Ultimately, though, no one knows exactly how mobile payments will evolve in the next few years. But one thing is clear: If those changes aren’t focused primarily on making the systems as easy to use and convenient as possible, the vision of a society that has moved past plastic and fully embraced mobile payments will remain just an illusion.

Matt Schulz is Senior Industry Analyst at He is also a regular contributor to’s My Money blog. 

Morning Consult