4 out of 5 new iPhone owners still haven't activated Apple Pay

A missed opportunity.

Though some of the patrons at my local food coop may be stuck in the 1960s, there's nothing funky about the store's checkout system. The kiosk at Green Fields Market accepts Apple Pay, and hardly a day goes by that I don't buy something there with my watch or my phone.

But it occurred to me this morning reading Gene Munster's note to his Piper Jaffray clients, that since I moved to Western Massachusetts two years ago, I've never seen anyone else use Apple Pay—not even at the Amherst Starbucks or the Whole Foods in Hadley.

To hear Tim Cook talk, Apple Pay is growing like gangbusters. From the Q2 2016 earnings call transcript:

"The reach of Apple Pay also continues to expand following a very successful launch in China in the March quarter and last week's rollout in Singapore. Apple Pay is growing at a tremendous rate, with more than five times the transaction volume of a year ago and 1 million new users per week. There are more than 10 million contactless-ready locations in the countries where Apple Pay has launched to date, including over 2.5 million locations now accepting Apple Pay in the United States, and more expansion of Apple Pay is coming soon."

That sounds better than it is. Munster did the math (see below) and he estimates that Apple Pay has been activated on only 20% of new iPhones. "Compared with investors expectations," he writes, "Apple Pay has had a slow start."

Ben Thompson goes further. The company, he told listeners to John Gruber's Talk Show last week, blew a one-time opportunity to promote Apple Pay last fall, when merchants across the U.S. were upgrading their kiosks to prepare for the great Liability Shift. Apple Pay is faster, more secure and less irritating than "dipping" chip-enabled cards into a hidden slot and waiting for permission to retrieve them.

If Apple were serious about growing the service side of its business, says Thompson, they would have been all over this, promoting Apple Pay heavily to merchants just as the new systems were coming on line. Instead, they let the waters get muddied by red herrings like CurrentC, an Apple Pay alternative whose rollout got postponed a second time last week and now has the stink of death.

In today's note to clients, Munster drills into the technical challenges of bringing Apple Pay to Android devices that lack the iPhone's secure enclave. What he doesn't explain is why Apple would want to do such a thing. For those hardy few who use it, Apple Pay is a reason to ignore Android and stick with the iPhone.

Below: As promised, Munster spreadsheet.

Screen Shot 2016-05-24 at 9.07.11 AM

Click to enlarge.


  1. David Humphrey said:
    I love the idea I can pay with my phone. I just wish the retailers I shop at enabled Apple Pay.

    May 24, 2016
  2. Turley Muller said:
    I love ApplePay. Problem is hardly any retailers accept it. Walgreens is about the only place I use it. It would be nice if Apple maintained a database or some type of app that listed all the retailers nearby that accepted it. Or perhaps an icon or alert pops up when you enter a retailer that accepts ApplePay.

    May 24, 2016

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