Apple leads in U.S. crawl toward contactless mobile payments

Apple appears to have the lead in mobile contactless payments, for now. But the race for tap-and-go payment dominance has only just begun, and as a bevy of recent reports suggest this may be a long race.

New data from Juniper Research, a U.K.-based financial technology analyst house, shows consumers using the Apple Pay mobile app now top 86 million, in a show of dominance over other leading contactless apps, including Samsung Pay and Android Pay. Juniper expects that by the end of this year, the total of OEM contactless payment app users will surpass 150 million worldwide.

Meanwhile, Gene Munster, Managing Partner at Loup Ventures and a long-time follower of Apple, reported that only 13 percent of the estimated 680 million iPhones in the hands of consumers, globally, have Apple Pay activated. Munster did not provide data on actual usage. He did, however, note that 2,091 banks, globally, now support Apple Pay, up from 1,439 last July.

A recent study by Pymnts.com and InfoScout offers a perspective on tap-and-go payment users: it found that fewer than one in 20 consumers have one of the major mobile contactless wallets. The good news for Apple is that 22 percent of mobile contactless users said they had tried that app at least once.

Juniper analysts remain optimistic about contactless payments generally and mobile contactless in particular. "We believe that as contactless usage gains traction and consumers/merchants recognize the speed and convenience it offers, then, as in European markets, there will be a further and significant increase in availability at the point of sale," said Juniper analyst Nitin Bhas. Bhas authored Contactless Payments: NFC Headsets, Wearables & Payment Cards 2017-2021, a new report detailing Juniper's data.

Where's the demand?

An informal survey by a group from the Federal Reserve Bank of Boston, however, suggests that while awareness of contactless payments is growing in the United States, many consumers and retailers still are not on board. The group spent a year using all the major apps for iPhones and Android devices to make in-store purchases at a variety of national and local retailers.

"It is challenging to determine whether a merchant terminal accepts contactless payments," if it supports near-field communications (NFC), according to the report on the project, Boston Fed Team Puts Mobile Payments to the Test. "In some cases, even if the POS terminal displays a contactless symbol, the reader is not turned on." Staff training also varied, often within the same store location, the report noted. When they could make contactless payment, "team members had positive experiences," the report stated.

One way to stoke usage is with robust loyalty and rewards programs, the Boston Fed suggested. But it also offered this caveat: "A consumer's priority is to find a retailer that sells what he wants to buy rather than finding a merchant that accepts a digital or mobile wallet, especially since credit and debit card acceptance is ubiquitous."

Lackluster uptake in the United States aside, executives at Mastercard remain optimistic about the future of contactless payments. Christophe Zehnacker, Head of Strategic Digital Partnerships at Mastercard, said in an interview published by Juniper that numbers of active users of its contactless products, as well as merchant acceptance locations, are growing at triple-digit rates, although most of that growth has been in Europe.

Zehnacker added that Mastercard is processing "tens of millions" of contactless payments, and that growth in wearables (such as smart watches and wrist bands) will drive those numbers higher. "When it comes to mobile and wearables, we are witnessing huge growth in contactless adoption, but not at the same level of usage compared to plastic, due to different maturity levels," he said. I ndeed, contactless cards are far more common, particularly in developing economies. Juniper reported the number of contactless cards issued globally reached 1.68 billion in 2016; the majority of those (about 850 million) were issued in China. Fewer than 100 million contactless credit and debit cards had been issued in the United States as of year-end 2016, according to Juniper.

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