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Apple Pay is No Slam Dunk

Apple Pay is No Slam Dunk

For all the high expectations and hype around Apple Pay, the reality is, Apple Pay is no slam dunk. Only 20% of the 1,000 people recently polled by Trustev who owned Apple Pay compatible iPhones had used Apple Pay.

What’s the hold up? "The validity and security of mobile payments is still really an unknown. People are skeptical. Early adopters are really the ‘beta-testers’ – there’s no track record," says attorney James Goodnow. "Combine this with last seasons’ highly publicized Target security breach, and it’s easy to see why people are hesitant to jump on board."

There are a lot of people like Mary Nolan. "The main reason I don’t use it, although I can is that I’m worried about how secure (or unsecure) it is. I hear about security breaches in the credit card world, and have experienced one personally, but I also hear and experience everything that my credit card companies are doing to actively prevent fraud. I hear nothing about what Apple Pay does or is doing to protect the consumer, or what systems are set up to prevent fraud," she says.

Nolan says she’s too busy to research Apple Pay so she doesn’t use it. "The concept is appealing, since I’m always carrying my iPhone and not always carrying a credit card or cash when I hike or run, but without the information to feel confident that the system is secure enough to use, I won’t use it."

Then there’s Dave Payne. "Just an hour ago I was at Walgreen’s picking up my prescription and I figured what the heck, I’ll try Apple Pay (I’ve used it only one other occasion in the year I’ve had the phone). So, I double tap my home button, the credit card pops up, asking for my fingerprint to complete the transaction. I put my finger on the fingerprint logo, nothing. I did it four more times, nothing. I finally just shoved my card in the darn machine. It’s not as ‘easy’ as the commercials make it seem. Since I never know if it’ll work, or if it’s really accepted where I’m purchasing something, it’s simply not worth the hassle. It’s so much easier to just use the credit card itself. And, mind you, I’m an Apple shareholder."

In the same way that people didn’t stop writing checks until well after the credit and debit cards were standard operating procedure at nearly ever consumer business on the planet, people are always slow to adopt.

Truth is, it’s hard to break habits. In the same way that people didn’t stop writing checks until well after the credit and debit cards were standard operating procedure at nearly ever consumer business on the planet, people are always slow to adopt, says Kim Stuart, COO of Atlas Rewards. "No matter how many times you explain to someone that it’s much safer to use Apple Pay, Android Pay, Samsung Pay, or PayPal than it is to whip out your credit card and swipe it, people are used to swiping. They’re going to swipe and the most likely factor that will cause them to start using mobile wallets for payments is the unavoidable delay in processing transactions quickly when using an EMV card and terminal," she says.

But it’s far too early to call Apple Pay a failure. "The fact remains that someone can throw a rock through your window and go through your credit card statements, or steal your wallet and actually have your credit cards more easily than hacking most mobile payment systems," says Goodnow, who believes that Apple Pay actually makes simple financial transactions more security because of its fingerprint for security. "Credit cards do not require any sort of biometric security," he adds.

Another reason the Apple Pay story isn’t over is demographics. "The unbanked, underbanked, and developing countries are using mobile wallets at an incredible rate compared to the U.S. and EU, and as Apple Pay grows as an option for payroll disbursement, along with P2P transfers, then the growth rate will likely skyrocket and usage numbers will go through the roof in developing countries," says Stuart.

In time there will be more people like Sally Elizabeth, "I absolutely love Apple Pay. I couldn’t wait to get my thumbs on it."

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Anonymous   |     |   Comment #1
Based on consumer comments, it seems the improved security message is not getting out there. Compared to any other payment methods, ApplePay, SamsumgPay, and AndroidPay are the MOST SECURE. This is because of the tokenization of their true card number. The merchant is never given their true card number, so it is never at risk of a security breach.

The fact is, security breaches will never be eliminated. The idea behind tokenization is to minimize the value of the stolen data. If criminals steal an ApplePay token number from a merchant database, the token CANNOT be used to make fraudulent purchases. The token can only be used with the device it is authorized to use. In fact, using your actual card is the LEAST SECURE method today.

The trick is to educate consumers without confusing them with all the tech-terminology like "Token." So it will take time for the message to get out there. Early adopters should educate their friends and card issuers need to promote the message in a consumer-friendly way.

This is going to be even more important as more and more companies jump on board with tokenization of their own cards. There are at least 12 other companies hinting at their own tokenization enhancements.
Anonymous   |     |   Comment #2
With no liability for someone else using my cc, I would not use anything else...letting someone have knowledge of my bank info for debit, etc. is foolish...in my view.  Then when coupled with Security Freeze with credit agencies...no harm, no foul.  Again, anything else is fee driven and a nightmare waiting to happen.  Finally, the risk of someone else going belly-up with your money does not appeal to me!  Have fun!
Anonymous   |     |   Comment #3
There is no improved security. The fraud rate for mobile pay systems is higher than traditional credit cards.  That is due to the banks' provisioning systems - how a bank allows your credit card number to be assigned to a mobile pay account.  Most banks have extremely weak security for changes after the initial provisioning process .  Thereafter, anyone who gets your credit card in their hand can load up mobile pay accounts with it.  Also note, that the zero-liability policy associated with mobile pay is the policy of your bank.  There is no legal protection for mobile pay users.