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How Samsung Pay is Challenging Apple Pay User Dominance

(New York, NY): For over a year after its introduction, Apple Pay was the only real option for consumers who wanted to pay with their smartphone. That changed towards the end of 2015, when Android Pay and Samsung Pay were rolled out. Among the three payment options, Apple Pay captures the greatest proportion of eligible users, with 33% of iPhone 6 owners* reporting that they’ve used it, but the fledgling Samsung Pay isn’t far behind at 23%, according to recent research by Auriemma Group. The firm’s latest Mobile Pay Tracker found that Samsung Pay users report higher satisfaction levels and fewer issues at the point of sale compared to Apple Pay, with near equal proportions recommending both mobile payment brands.

Since its inception, Apple Pay has attracted educated, affluent, and young users, and Samsung Pay users look similar. “Only the newest, and most expensive, models of phone support mobile payment, so owners tend to be affluent,” says Marianne Berry, Managing Director of Auriemma’s Payment Insights practice. “Owners of the Samsung Galaxy and Note look demographically similar to owners of the iPhone 6 series, although iPhone owners are almost evenly divided between men and women, whereas Android phones, Samsung included, tend to skew male.”  Within the pool of eligible phone owners, mobile pay users are even more affluent and well-educated than non-users.

Users of both mobile pays rate their experience positively, but Samsung Pay users report higher levels of satisfaction than their Apple Pay counterparts (92% vs. 84%) and are near equally likely to recommend the application (49% vs. 53%). “The impact of satisfaction becomes more telling when we examine how these users pay for their monthly purchases,” says Berry. “The majority of Samsung Pay users utilize other payment methods less since beginning with Samsung Pay. No other mobile payment application can say that.” In fact, Samsung Pay eligible consumers report the highest proportion of discretionary spend going to the payment app (22%), while Apple Pay eligible consumers cite a lesser proportion (15%), behind both credit card and cash spend.

Samsung Pay users also spend more using the service ($82 vs. $75) within an average week. They report fewer difficulties at point of sale (19% vs. 31% for Apple Pay), presumably due to the technology that mimics the magnetic stripe and allows it to be used at a much wider range of merchants. “Samsung Pay advertising highlights this benefit, and 37% of those who are aware of this have used the method where other mobile pays aren’t accepted,” says Berry.

Where signage isn’t easily viewable, Samsung Pay users show greater enthusiasm to use the method in-store, with 56% always asking store personnel about acceptance compared to 42% of Apple Pay users. “Some of this may be due to its newness, with most Samsung users reporting three months of experience compared to a year for Apple Pay,” says Berry. “Even so, Samsung Pay outscores Apple Pay on a number of metrics. Right now the pool of eligible Samsung users is much smaller than Apple’s, but as more Samsung phones are upgraded, the application’s broader merchant acceptance has the potential to more quickly convert its smartphone owners to Pay users.”

Survey Methodology

The study was conducted online among 2004 consumers in the US with Apple Pay eligible (n=1,000), Android Pay eligible (n=838), and/or Samsung Pay eligible (n=327) smartphones between March 3 – April 7, 2016. Respondents were screened to own an iPhone 6/6+/6s/6s+ or Apple Watch (in combination with an iPhone 5/5C/5S)* – a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5 – and/or other Android phone with KitKat (4.4) OS or newer.  All respondents also have a general purpose credit card in their own name. In addition to the quantitative web survey, twenty in-depth interviews (IDIs) were conducted March 21, 2016 – March 25, 2016 via telephone with Android Pay and Samsung Pay users recruited from the quantitative web survey. For this round of IDIs, the focus is or was on the Android and Samsung Pay users, and their usage and experience thus far.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

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27% of the Eligible Population is Using Mobile Payments

New York, NY):  Back in October of 2014, Apple Pay was launched with great fanfare, and for almost a year it was the only game in town for consumers who wanted to pay with their smartphones. Since then it’s been joined by Android Pay and Samsung Pay, with more branded mobile payment solutions, such as Walmart Pay and Chase Pay, waiting in the wings. But is anyone using them?

The answer, according to the latest Mobile Pay Tracker survey from Auriemma Group, is a qualified yes: about 7% of all smartphone owners* claim to have at least tried mobile payments. “It’s important to remember that less than half the smartphones that US consumers carry are capable of mobile payments,” says Marianne Berry, managing director of Auriemma’s Payment Insights practice. “Among those with an eligible phone, 27% of consumers we surveyed say that they have used Apple, Android, or Samsung Pay.”

However, that doesn’t mean they can leave their wallets at home yet.  Mobile pay users still put the lion’s share of their purchases on old-fashioned plastic, since stores that accept mobile payments are still hard to find in the US: 39% say they would use mobile payments more if more stores/apps accepted it. 61% say their mobile pay usage is supplanting cash transactions, suggesting that the phones are being used for smaller purchases, confirmed by average ticket size—-one-third of those who have used mobile pay in the past week made a purchase of $25 or less. These transactions are made both in-app and in-store, except for Samsung Pay, which has yet to offer in-app payments. On average, users report that 17% of their discretionary spending was done with mobile pay.

Even when they find a store that accepts mobile pay, only one-third of mobile pay users (31%) pay that way every time they know it is accepted, most frequently citing that they simply forgot. “Reaching for the phone instead of the wallet isn’t an automatic reflex, even for mobile pay enthusiasts,” said Berry. “And even if they do remember, many will give up and use their plastic cards if they encounter friction at the point of sale, particularly if there are other shoppers in line behind them.”

Mobile payments have been around for only a year, a fraction of the many decades that plastic cards have dominated. As the upgrade cycle puts the newest smartphones into the hands of more consumers, increasing numbers of them will have the opportunity to try out this new way of paying. “Overall satisfaction with mobile payments is quite high at 80%, despite complaints about low merchant penetration and inconsistent customer experience at point of sale,” Berry stated. “But mobile payment has yet to reach the tipping point that will take it from novelty to norm.”

Survey Methodology

The study was conducted online among 2004 consumers in the US with Apple Pay eligible (n=1,000), Android Pay eligible (n=838), and/or Samsung Pay eligible (n=327) smartphones between March 3 – April 7, 2016. Respondents were screened to own an iPhone 6/6+/6s/6s+ or Apple Watch (in combination with an iPhone 5/5C/5S) – a Samsung Galaxy S6, S6 Edge/Edge+, S6 Active or Galaxy Note 5 – and/or other Android phone with KitKat (4.4) OS or newer.  All respondents also have a general purpose credit card in their own name. In addition to the quantitative web survey, twenty in-depth interviews (IDIs) were conducted March 21, 2016 – March 25, 2016 via telephone with Android Pay and Samsung Pay users recruited from the quantitative web survey. For this round of IDIs, the focus is or was on the Android and Samsung Pay users, and their usage and experience thus far.

* Auriemma conducted a standalone market sizing study in March 2016 among 1,100 US adults. Data was weighted by gender, age, race/ethnicity, household income, and education to be nationally representative of the entire US adult population (aged 18+).

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  For more information call (212) 323-7000.

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Apple Pay Adoption: Growing or Slowing?

By Rene Ritchie, iMore.com

Thursday, Aug. 6, 2015

The tale of two Apple Pay surveys.

There have been some conflicting surveys out about Apple Pay in the last couple of weeks, one of which says the mobile payment service is growing and the other, declining. So, which is it?

The Auriemma survey is clear and up front about where the data comes from, is easy to read, and comes off as professional and, well, sane:

Apple Pay usage in the US is growing, driven by both increased frequency of transactions and the expanding base of iPhone 6 owners, according to Auriemma Consulting Group’s Apple Pay Tracker, which interviewed 500 iPhone 6 and 6+ owners between May 29 and June 15, 2015. Forty-two per cent of Apple 6/6+ owners reported having used Apple Pay, virtually identical to the proportions reported in two previous waves of the study conducted in February and April 2015. “While the proportion of users has remained stable, the denominator has grown through new iPhone and Apple Watch sales and the upgrade cycle. We’ve also seen the average number of transactions increase both in-store and in-app,” says Marianne Berry, Managing Director of ACG’s Payment Insights practice.

They go on to say Apple Pay is considered to be move than a novelty, is growing at points of purchase, and that there appears to be lots of room for further growth.

The PYMNTS/InfoSocut is the opposite. It’s almost impenetrable, written as half-narrative about a conference, doesn’t clearly say where the data comes from, and is filled with comments from people who appear to have competing interests to Apple Pay—including the CEO’s of Paypal owned Paydient and Samsung-owned LoopPay. Which is, frankly, bizarre.

In March, survey data indicated that 15.1 percent of eligible Apple Pay users had tried the service – when surveyed in June 2015 that had fallen to 13.1 percent.

Usage fell as well – when asked in March, “Did you use Apple Pay on this transaction,” 39.3 percent of consumers said yes. When asked the same question in June, only 23 percent replied in the affirmative.

They go on to say Apple Pay has dipped with committed users and that Apple Pay doesn’t sell phones. Then they go into the appalling quotes from competitors.

iMore hasn’t looked into Apple Pay usage among iPhone owners yet, but we did ask Apple Watch owners as part of our ongoing survey. We’re only a quarter of the way through the data collection phase right now, but with thousands and thousands of responses in already, the numbers are currently as follows: 60% have used Apple Pay at least occasionally, and over 30% use it whenever it’s available to them.

That’s for a service that, until very recently, was only available in the U.S., is still only available in the U.S. and U.K., is still adding banks and retailers, and won’t be launching support for loyalty and store cards until iOS 9, later this fall.

Still, we’ve seen how Apple Pay accessibility can empower people:

That Apple Pay on the iPhones 6 (and [the] Apple Watch) works so effortlessly that it instills feelings of empowerment and independence for users with disabilities is profound.

How Apple Pay is automagically secure, which literally turns what previously was an extremely stressful experience into a delightful one:

The first time you experience this seamless transfer of your accounts with Apple Pay, you’re going to want it everywhere you purchase goods and services. That, combined with very positive word-of-mouth, is going to make entering a card number feel very antiquated. And I suspect this change will come about very quickly.

And how great Apple Pay is to use on the London Underground:

Apple Pay is a great way to get around London. Keep your wallet safely tucked away in your bag or pocket and better keep track of your transactions. I managed to visit London for two full days without using the debit card connected to my Apple Pay

Without more data, it’s impossible to tell with an absolute certainty which set of numbers most accurately present the current state of Apple Pay growth. It’s pretty easy, however, to judge the companies presenting the data. AGC is clean, clear, and professional. PYMNTS/InfoSocut rings just about every integrity alarm bell imaginable.

Negative Apple headlines drive a lot of attention, though, so it’s no surprise the negative numbers are getting a lot of pickup. Still, it’s better to look at both sets, and both companies, and match what they say against your own experiences, and then decide for yourself.

For me, I’ll be using Apple Pay as much as possible as soon as possible.

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Apple Pay Use Growing in US

(New York): Apple Pay usage in the US is growing, driven by both increased frequency of transactions and the expanding base of iPhone 6 owners, according to Auriemma Group’s Apple Pay Tracker, which interviewed 500 iPhone 6 and 6+ owners between May 29 and June 15, 2015. Forty-two per cent of Apple 6/6+ owners reported having used Apple Pay, virtually identical to the proportions reported in two previous waves of the study conducted in February and April 2015. “While the proportion of users has remained stable, the denominator has grown through new iPhone and Apple Watch sales and the upgrade cycle. We’ve also seen the average number of transactions increase both in-store and in-app,” says Marianne Berry, Managing Director of Auriemma’s Payment Insights practice.

Data from the study indicates that users consider Apple Pay to be more than a novelty, Berry notes. “It’s not surprising that the first cohort to own the newest iPhone would be eager to try Apple Pay, so we were particularly interested in comparing trial to adoption rates. Eighty-four percent of Apple Pay users reported having made more than three transactions in stores, and 76% have used it more than three times in-app, suggesting that the abandon rate is low.”

The number of places where Apple Pay is used has also increased. In the April survey only 13% of Apple Pay users had used it in more than six stores, while two months later that number had grown to 24%. During the same two month period the number using Apple Pay for 6 or more apps grew from 1% to 10%.

“It’s likely that the number of retailers accepting Apple Pay will expand, especially as merchants hear from these customers and look at their purchasing power. Seventy per cent of Apple Pay users state that they are more likely to choose a store that accepts Apple Pay,” Berry says, “and this group is even more affluent than the overall Apple phone owner population.”

Indeed, one of the few complaints users have is a lack of opportunities to use Apple Pay. The effect is particularly notable in the burgeoning m-commerce market, as Apple Pay devotees have learned to search the App Store to find apps that accept the payment method. “It’s a rare instance of consumers starting out with a preferred payment method and searching for a place to spend it—like the proverbial hammer looking for a nail.”

Despite the enthusiasm of early adopters, Apple Pay sales volume accounts for only a tiny share of overall credit and debit card sales, and Berry doesn’t expect that to change quickly. “In the early days after launch, we found a high level of intent to use among those who hadn’t tried it yet. As more iPhone owners gain the ability to use the service through the upgrade cycle, we’re seeing a pretty stable proportion of about 30% who are taking a ‘wait-and-see’ attitude, often citing security concerns about a new technology. The introduction of Android Pay later this year may accelerate the evolution of perceptions about mobile payments moving from novelty to mainstream.”

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines. For more information, call (212) 323-7000.

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Apple Pay Use in US Steadily Increasing Beyond Early Adopters

(New York, NY): The use of mobile payments is continuing to grow and broaden, as nearly half (46%) of iPhone 6 owners have successfully used Apple Pay, up from 42% just two months ago. The latest wave of Auriemma Group’s bi-monthly Apple Pay Tracker, which interviews a fresh sample of 500 iPhone 6 owners every 8 weeks, also finds high levels of repeat usage, with 63% reporting that they use Apple Pay at least weekly.

“The Apple Pay base is broadening from the tech-savvy early adopters,” says Marianne Berry, Managing Director of Auriemma’s Payment Insights practice. In Wave 1 (conducted between January 26 – February 6, 2015), 70% of Apple Pay users identified themselves as people who “like to be the first to have the newest model phone.”  In Wave 2, conducted April 10-20, that figure had dropped to 55%, indicating that less tech-oriented types are now trialing mobile payments via Apple Pay.

Consistent with the finding that the newer users might be less technologically adept, a significant number are reporting problems in set-up.  The April survey found that 45% of respondents reported having issues setting up Apple Pay. “Among those who reported issues setting up Apple Pay, 62% acquired their iPhone in 2015, compared to 38% who got their iPhone in 2014,” Berry noted.

Despite these issues, user satisfaction is very high, and their main complaint is the lack of retail venues accepting Apple Pay.  67% of those that have used Apple Pay in a brick and mortar store say they are migrating to merchants that accept Apple Pay. And 51% say that they are using other payment methods, such as cash, less often since they began using Apple Pay.

“Mobile payments still comprise only a small fraction of overall payments volume,” said Berry, “but Apple Pay is the first service to garner double-digit numbers of users. As the upgrade cycle gives more consumers access to Apple Pay, and Android Pay comes to market, the long-awaited transformation of the payments industry may finally have begun. It will be interesting to see how US adoption patterns compare to those in the UK and in Canada—markets with higher penetration of NFC and contactless cards—when Apple Pay is rolled out there.”

Auriemma’s Apple Pay Tracker conducts an online survey of 500 randomly selected iPhone 6/6+ owners every 8 weeks, accompanied by qualitative telephone interviews; the full study is available through an annual subscription. Data reported above comes from interviews conducted April 10 -20, 2015.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

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Auriemma Launches Apple Pay Consumer Adoption Study

(New York, NY):  Auriemma Group announced Thursday the launch of Apple Pay Tracker, a longitudinal study that will monitor adoption and usage of the mobile wallet throughout 2015.

The study, comprising bimonthly surveys of 3,000 iPhone 6 and 6 Plus users over the course of the year, will illuminate Apple Pay’s impact on payment providers, retailers, and other industry stakeholders.

“Apple Pay may change where people shop, how they pay, and the overall balance sheet of the payments system,” said Marianne Berry, Managing Director of Auriemma’s Payment Insights practice. “Issuers, merchants, networks, investors—all need to monitor these changes and have the flexibility to respond immediately to challenges.”

Every eight weeks throughout 2015, subscribers will receive a report tracing current levels of Apple Pay activation and usage by a randomized sample of 500 iPhone 6 owners. In addition to measuring growth in the adoption curve, subscriber reports will include information gleaned from in-depth interviews with respondents detailing their reasons for adopting—or bypassing—the service. Each iteration of the research will examine a unique subset of users, ranging from early to mainstream adopters as the market matures. Interviews with respondents will explore:

  • Motivations for usage
  • Changes to behavior and purchasing habits
  • Impacts on the customer relationship and brand attribution
  • The role of social influences in adoption and usage
  • Perceived security benefits and concerns
  • User experience and likelihood to recommend Apple Pay to other

“There is intense interest in both the industry and mainstream media about Apple Pay,” Berry said. “While transaction volumes and other aggregate data will be widely reported, these statistics won’t explain the behavior driving the numbers.“For example, how much growth in transaction volume is being driven by regular users and how much is attributable to growth in iPhone 6 sales? Are consumers changing their choice of retailers depending on the availability of Apple Pay? Do consumers make a conscious choice at point of sale among the cards provisioned in their Passbook, or does the default card become the most frequently used?”

Apple Pay Tracker joins a suite of market intelligence and syndicated research studies offered by Auriemma’s Payment Insights practice. In addition to mobile payments, Auriemma conducts consumer research focused on credit, debit, and prepaid products.

“Whether or not Apple Pay reaches broad acceptance,” Berry said, “millions of consumers will pay with their phones for the first time. This may be the long-awaited catalyst that ignites mobile payments.”

 About Auriemma Consulting Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  For more information about Auriemma’s research, please call 212-323-7000.

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