Apple Pay & Apple Watch

Wristly Apple Watch Insider’s Report #16

August 18th, 2015

Money, money, money!

This week the focus of our Wristly research is on Apple Pay. Building on commentary from the noted Benedict Evans, we explore a fundamental question: is Apple Pay truly magical when using Apple Watch? And if so, will Apple Pay become one of the primary drivers of adoption and usage for the Watch?

Since Apple Pay is only available in the US and more recently in the UK, we only sent this week’s survey to the members of our “Inner Circle” residing in these countries. We still managed to get over a 1,000 respondents! The participation of our members is staggeringly high and we’re very thankful to each and every one of you.

80% are already using Apple Pay!

What an incredible achievement in such a short amount of time — yes, 80% of Apple Watch owners who can, have already used Apple Pay.

By comparison, the various surveys published in 2015 in the US assess Apple Pay usage level on iPhone 6 at around 15% to 20%. For our research with our panel of Apple Watch owners, while the vast majority used Apple Pay first with their iPhone, it is interesting that slightly more than 19% of respondents (or 25% of those who have used Apple Pay) first tried it on their Watch.

Another interesting insight we learned is that Apple Pay most commonly gets tried first in the physical world of retail as opposed to use to complete an in-app purchase.

Less than 5% don’t want to use Apple Pay!

When we analyze the 19% of Watch users (n=205) in the US who haven’t yet used Apple Pay, about 5% of that subset indicate that they “do not perceive a benefit”, another 5% have “concerns about the security of it” and about 15% state that their “payment needs are being met” already.

This implies that as many as 25% (5% + 5% + 15%) of the “non-users” may never be interested in using Apple Pay at all. We can then multiply this 25% by the 19% of “non-users,” with the result that only about 5% of Apple Watch users are unlikely to use Apple Pay. Stated differently, our data suggests that Apple Pay on the Watch could eventually reach an adoption rate as high as 95%.

Additionally, 29% of these non-users report that one of the primary reasons they haven’t yet used Apple Pay is simply the fact that their card issuer doesn’t currently support it! Our research indicates that interest in Apple Pay is high and suggests many more will use the service when their bank supports it.

And a majority agree with Benedict Evans, Apple Pay is magical!

While slightly more than half of our users already find Apple Pay “magical” on the Watch, another 42% would characterize it as “convenient.” Only 4% of users find it “not that useful” and another 3% have other concerns about using Apple Pay.

Supporting this insight and corroborating Ben Evans’ earlier point, 79% of our users report a preference for using Apple Pay with their Watch versus their iPhone. All in all, our research suggests Apple Pay on the Watch is a delightful experience and it therefore seems fair to extrapolate from its early usage patterns that adoption will continue to be strong.

Ideal for frequent and recurring purchases

With 81% claiming to use Apple Pay regularly for retail grocery type shopping and 60% using it for everyday recurring type services like purchasing a coffee at Starbucks, Apple Pay has the potential to become a strategically important payment method. This would also suggest that as the Watch gains market share it will have a significant impact on the payments processing industry.

It pays for merchants to support Apple Pay

62% of our panelists report a preference for doing business with merchants due at least in part to that store’s decision to support Apple Pay. Should the Watch continue to become a more mainstream device, this new behavior will most likely create further marketing pressure on those retailers holding back.

Very high brand impact already!

A surprisingly high percentage of the Apple Pay users — 86% — is actively looking for the Apple Pay branding materials pictured above when checking out at retail.

And when Apple Pay is available, a very large majority of 81% state that they are using it.

Is it a “land grab” opportunity?

Only 11% of users have configured more than 4 cards in their Apple Pay setup, while a massive 69% have only set up one or two cards.

This suggests a big land-grab opportunity for the financial services industry and card issuers. Whichever cards are positioned first or second in Apple’s new digital wallet stand to gain the lion’s share of that user’s Apple Pay spend!

And 78% use it weekly!

Early in June, we reported that 65% of the members of our panel who had set up Apple Pay were using it on a weekly basis. You can download a copy of that report here.

Fast forward to August, and two months later, a total of 78% of our panel members who have set up Apple Pay are reporting using it at least once in the last week and 14% claiming a daily (or more) usage rate. That’s more than 15% increase and illustrates an incredibly fast pace of usage and adoption. We will continue to measure this over time.

High Desire to Use Apple Pay More

Finally “Wanting to use it more often at retail” took the top spot in the ranking of several key statements about the Apple Watch and

Apple Pay, closely followed by “It’s convenient.” “It protects my privacy” took last spot — though still with a very high 88% agreement rate!

As we’re closing on our third month of this Apple Watch research experiment, we would like to thank each one of you for contributing to enlightening the industry on this new platform. As many of you know, the jury is still out especially for most tech insiders on how important the platform will become. However, according to our Inner Circle insights into your usage, and despite the positive bias induced by the self-selection of our panel, we continue to be impressed by your reported level of attachment to the Watch and positive attitudes towards its usage.

With Watch OS 2.0 on the near horizon and the resulting opening up of the world of innovative 3rd party apps, this trend should only continue.

Feel free to share this article and please continue to refer family members, friends or colleagues who also have the Watch and would be interested in our project.

They can join here.