A year after its launch, Apple Pay has infiltrated numerous banks and merchants and two generations of Apple handsets. But its actual usage isn't close to living up to the hype.
Certainly banks aren't the ones holding back adoption. Last year, just 13% of the banks and credit unions surveyed for Pulse's annual Debit Issuer Study said they were involved in a mobile payments rollout; by January of this year it had jumped to 84%, following the October 2014 launch of Apple Pay.
At the time, Apple Pay was still near the height of its marketing push, but issuers reported only a 0.68% average penetration of eligible debit cards loaded on Apple Pay.
Though this was held back by the limitation that Apple Pay could work only on the latest iPhones, the people who enrolled a debit card with Apple Pay barely used it. The Pulse survey found that consumers were making just 0.34 transactions per month (or roughly one transaction every three months) per eligible debit card loaded on Apple Pay as of January 2015.
"The Apple PR machine created a sense of, you have to get on board. Every bank is doing it so you'd better get with the program too," said Tony Hayes, a partner at Oliver Wyman. "What you're seeing much less around is, are people using Apple Pay?"
Hayes presented during SourceMedia's PayThink conference, taking place this week in Las Vegas. Discover published the 2015 Debit Issuer Study in September, compiling data from 70 banks and credit unions that represent 147 million debit cards.
Drilling down to individual financial institutions, there is still little movement among consumers, even at major debit issuers like SunTrust.
"Adoption numbers are pretty small at this point," said Shannon Johnson, SunTrust's senior vice president of consumer deposits and payments, in a separate presentation at PayThink. "At SunTrust, about 15% of iPhone 6 owners have provisioned their card and about 25% of those have done [at least one] transaction."
First Financial Credit Union also presented Apple Pay adoption figures at the event. Of its 65,000 members, 9,000 use mobile banking and 48% of those use an iPhone. Of the iPhone users, just 8% - 345 members - use Apple Pay.
The lack of use stems, in part, from a lack of creativity among Apple partners, Johnson said. For most issuers, Apple Pay abruptly appeared on the scene with little warning but a clear message to get on board.
"Prior to that it was conceptual, the option of mobile wallets; it then became real," she said. "We're so early in the stages in terms of understanding the opportunity."
Merchants must do more than simply accept Apple Pay if they want to benefit from the technology, she said.
"There's a short list of merchants who have integrated it in an interesting way," Johnson said, and she cited Panera Bread as one company that has gone the extra mile in integrating Apple Pay with its ordering process.
However, Panera was one of Apple's pre-launch partners for Apple Pay, so the company had a head start in determining how to properly deploy it.
Perhaps the most telling example of Apple Pay's issues is Santander, which chose to deploy Apple Pay first in the U.K., despite Apple Pay coming to that market only in July. Santander still has not rolled out Apple Pay in the U.S.
The U.K. is a more favorable environment for contactless mobile wallets like Apple Pay because the merchant adoption of contactless payments is better than in the U.S., said Geoffrey Brown, director of cards acquisition at Santander.
But that hasn't translated to better consumer adoption, he said.
"It's similarly not an overwhelming thing where people start using it and spending like crazy," Brown said. "They have the opportunity and they really haven't."
As in the U.S.,Apple Pay's U.K. launch came with its own share of "hiccups," he said, citing an issue with London's transit system. Transport for London was inadvertently double-charging riders when they entered the system by tapping an Apple Watch but left by tapping their iPhone, and vice versa. The unique device ID for each Apple product fooled the system into seeing them as two separate riders even when both devices were registered to the same Apple Pay account.
"People have to be confident when they're making a switch in their payment type," Brown said. "And a rocky start doesn't help."