18 April 2024

Apple Pay Propel ‘Mobile Wallet’ Idea

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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.

Click here to access the full article on The Wall Street Journal. 

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