For all the hype about Apple Pay, I for one have been pretty disappointed in the adoption curve thus far. To give you an idea, the most recent data shows that, despite Apple having 800M+ iTunes accounts with credit cards on file, the number of eligible Apple Pay users who have tried the service dropped from 15% to 13% during the period from March to June 2015. This suggests that as more people buy the iPhone 6, a lower percentage of them are actually using Apple Pay. But why?<\/p>\n
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The fact is that a third of iPhone 6 users cite satisfaction with their current payment methods as the primary reason they eschew Apple Pay, and another third simply don\u2019t understand how the software works. A sizable 19% are concerned with security as well. Compounding the problem is the fact that Apple Pay isn\u2019t yet widely accepted by merchants. Although hitting the one million retail location mark over the summer, most of these Apple Pay-compatible locations represent only a handful of major US retailers, with another contingent of major retailers trying to roll out a competing mobile wallet platform called CurrentC.<\/p>\n
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That in mind, an interesting counter-point is that a whopping 80% of Apple Watch users HAVE<\/em> tried Apple Pay, and 96% of Watch users want to use it at more locations, with 62% saying they\u2019d visit supporting retailers more often.<\/p>\n <\/p>\n So, what\u2019s wrong with Apple Pay\u2019s value or operating model that is ultimately slowing adoption? I\u2019ll consider a couple of hypotheses here:<\/p>\n <\/p>\n \u00a0<\/strong><\/p>\n <\/p>\n I think the Apple Watch figures actually support this hypothesis, as paying with one\u2019s watch rather than cell phone could plausibly increase value enough to change the adoption curve significantly. (Alternatively, the Watch is simply still in early adopter phase with users more willing to try new features.) However, Apple isn\u2019t oblivious to these possibilities \u2013 and in fact is actively combating them. In a somewhat uncharacteristic move, Apple chose open standards and APIs for Apple Pay \u2013 potentially allowing companies like Venmo to innovate with the technology and create direct network effects among users.<\/p>\n \u00a0<\/strong><\/p>\n Ultimately, I think consumers will force merchants to adopt Apple Pay or be left behind, though I don\u2019t have a sense for how long that could take. However, I don\u2019t <\/em>think it will happen from B2C Apple Pay on iPhone 6. Instead, we may actually see adoption driven by the Apple Watch and C2C transactions from partners like Venmo.<\/p>\n <\/p>\n What do you think? Agree\/disagree with these hypotheses? Are there other possible explanations?<\/p>\n","protected":false},"excerpt":{"rendered":" Explores network effects in Apple Pay and why adoption to date has been lower than expected.<\/p>\n","protected":false},"author":59,"featured_media":899,"comment_status":"open","ping_status":"closed","template":"","categories":[287,394,395,388],"class_list":["post-897","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-apple","category-mobilepay","category-networkeffect","category-venmo"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/competing-with-network-effects\/","yoast_head":"\n\n
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