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6 Reasons Apple Pay Will Overcome Slow Start

This article is more than 8 years old.

Judging from a lot of coverage lately, you'd think Apple Pay is a failure. You'd think wrong.

As I wrote in a recent opinion piece, nobody who was paying attention should have expected Apple's mobile wallet to take off like wildfire. Too few retail stores have the new checkout terminals needed to accept Apple Pay, some people are (erroneously) worried security will be worse than credit cards, and the rest of us still have the habit of swiping cards rather than waving our iPhones to pay. But payments and retail experts, if not Apple fanboys, expected any of this to change in the space of a year, notwithstanding Apple CEO Tim Cook's claim that 2015 would be "the year of Apple Pay," at least in retail stores.

Even so, it's way too early to write off  Apple Pay. Here are six reasons why it's likely to gain momentum in the next couple of years:

1) Apple has the lead already: Mobile wallets may remain a novelty, but Apple Pay still owns three-quarters of the market, according to payments advisory firm Crone Consulting.

2) Time's up for merchants. Banks had set an Oct. 1 deadline after which retailers that don't accept new chip cards will be liable for fraud on the cards. The checkout terminals that take the new cards invariably are also outfitted to take mobile wallets such as Apple Pay. While that deadline's past, it woke up the 73% of retail outlets that don't have the new terminals that time's up and they better plan to get with the program.

3) Chip cards are slow: The new chip-and-signature cards you've been getting in the mail actually take longer to complete a transaction than mag-stripe cards you know and love. That leaves an opening for Apple Pay (and other mobile wallets) to show how they're actually faster to pay with than cards.

4) Payment habits are starting to change: Thanks to apps such as Starbucks' and Uber's, more and more people are finding that paying with a phone can be a snap. A lot of Apple's initial focus on fast-food restaurants and grocery stores will start paying off by making payment by phone a daily habit.

5) Small businesses are starting to catch on: Although many large retail chains accept Apple Pay and other wallets, small businesses have lagged because of the cost of replacing terminals. Apple's has recently focused more on them, and says it's adding 80,000 small and mid-sized businesses every month.

6) Rewards cards are the secret weapon: In June, Apple started making it easier for retailers to get their rewards cards installed on Apple Pay, providing another incentive to use the wallet. And this week, Apple snagged perhaps the most important rewards program of all: Starbucks'.

It still will take a couple more years for Apple Pay to be widely used, but there's plenty of reason to believe that before too long, our phones really will replace most of our physical wallets.

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