Apple Inc.’s payments service, now three months old, is
making progress toward a goal that has eluded other mobile wallets: persuading
people to use it. Previous efforts by Google Inc., eBay Inc.
and a host of startups to prod shoppers to pay for purchases with a mobile
phone have languished, because consumers didn’t see an advantage over swiping a
credit or debit card.
Early signs suggest that Apple Pay is different. The
machines also accept Softcard, a competing mobile-payments service owned by a
group of U.S. wireless carriers, but Ms. Salcedo estimates that five times as
many customers use Apple Pay as Softcard.
Finance-industry veterans attribute Apple Pay’s momentum to
the popularity of Apple’s consumer gadgets, a massive marketing push from banks
and credit-card issuers, and security concerns following high-profile data
breaches at retailers like Target Corp. and Home Depot Inc. that
exposed customers’ debit- and credit-card information.
Instead of swiping a card and signing a receipt, shoppers using
Apple Pay wave an iPhone in front of a wireless reader and complete the
transaction with a fingerprint. Authorization relies on a one-time code;
merchants don’t have to see a card number, reducing the chance of theft.
McDonald’s Corp. and drugstore operator Walgreens
Boots Alliance Inc., two early adopters of Apple Pay, said last month that
twice as many shoppers are paying through wireless readers since Apple Pay
arrived. Neither company would disclose how many of those transactions use
Apple Pay versus other payment services. In another sign of Apple Pay’s impact,
Google is in advanced talks to acquire Softcard, the competing mobile-payments
service, according to people familiar with the matter, the Journal has
reported.
Apple says more than 220,000 locations accept Apple Pay, and
that card issuers responsible for 90% of credit-card spending support the
service. But there has been little data available to indicate how widely the
service is being used. The company, which launched it Oct. 20, may offer some
details Tuesday, when it reports financial results for the period ended Dec.
27.
App developers like the system because it simplifies the
checkout process, reducing the chance that a shopper will abandon a purchase.
Merchbar, which sells music-themed goods like Ozzy Osbourne water bottles and
Foo Fighters T-shirts, said 20% of purchases in the past month were made
through Apple Pay. The service reduced the average checkout time to 17 seconds,
from 103 seconds.
So far, Apple Pay is limited to the U.S. and works only on
the latest iPhones and iPads. Just a small percentage of retailers have the
necessary readers, and a consortium of retailers, including Wal-Mart
Stores Inc. and Lowe’s Cos., plans to introduce its own
mobile-payment service later this year.
Meanwhile, banks and credit-card companies are helping to
promote Apple Pay, as evidenced by a barrage of commercials from Bank of
America, Visa, MasterCard Inc. and Wells Fargo & Co. Randall Vogsland,
a 37-year-old technology consultant in Minneapolis, said he uses Apple Pay
several times a week to pay for sandwiches at Subway or buy things at
Walgreens. He doesn’t like carrying a bulky wallet, and he likes Apple Pay’s
security.
The service isn’t flawless, though. Store-branded cards
generally don’t work with Apple Pay, so Mr. Vogsland can’t use his Macy’s Inc.
credit card, even though Macy’s accepts Apple Pay. The service also doesn’t
work with corporate credit cards or certain co-branded cards tied to loyalty
programs.
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