June 11th, 2019 | 4 MIN READ

The truth about Apple Pay for ecommerce

Written by author_profile_images Linda Bustos

Linda is an ecommerce industry analyst and consultant specializing in conversion optimization and digital transformation.

Mobile wallets have infiltrated digital commerce, offering a way to streamline checkout across desktop, mobile Web and apps. Eliminating the need to henpeck addresses and credit card numbers, wallets such as Apple Pay reduce errors and boost conversions. According to Apple J. Crew increased mobile conversion over 20% and desktop 15% with Apple Pay, and Lululemon by “several orders of magnitude.”

But is Apple Pay right for your checkout?

Apple Pay by the numbers

Of 900 million iOS installs worldwide, an estimated 383 million users (43%) have enabled Apple Pay, up from 20% in December, 2017. Yet only 27% of eligible iPhone users have ever used Apple Pay, and only 8% use it weekly. (23% say they don’t know how to use mobile payments).

Despite Apple CEO Tim Cook’s disclosure that Apple Pay transactions exceeded $1.8B in Q4 2018, the bulk of Apple Pay use happens offline, particularly in international markets such as China, Japan and Russia where the wallet is heavily used for public transit. According to analysts at Loup Ventures, only 12% of Apple Pay users are US-based.

Apple Pay’s online decline

While more than half of US retailers support Apple Pay in-store, only 24% of the top 100 US merchants offer Apple Pay digitally (desktop, mobile or native apps).

Merchants that do support mobile wallets are increasingly dropping out, according to a survey by Kount. Among respondents, Apple Pay acceptance has fallen from 48% to 35%, and Google Pay from 38% to 25%. PayPal fills the alternative payment void among these merchants, jumping from 48% to 64% acceptance.

Both J. Crew and Lululemon have ditched Apple Pay online for PayPal, despite their early wins.

Apple Pay losing Touch?

The appeal of one-tap payments is lost on newer iPhones (X and higher) which replace Touch ID with Face ID. Many iPhone users lament the change, especially for Apple Pay in-store -- the awkward selfie in the Starbucks line has less appeal than the thumb-tap. This extra handling adds friction to digital checkouts, and as more iOS users upgrade devices, both user and merchant drop-off may increase.

Apple Pay may not flow with your flow

Apple Pay’s not plug-and-play, it requires some custom development. You’re responsible for data validation, which may involve tightening or loosening your business logic to fit with how a customer has input their address, zipcode, telephone or card number within Apple Pay. For example, your checkout may require dashes in a telephone number or may reject PO boxes. For many merchants, changing business logic to serve a relatively small number of Apple Pay users is more hassle than it’s worth.

While Apple Pay’s payment sheet lets you customize line items, it doesn’t allow user input within checkout. The payment sheet shows the credit or debit card linked to Apple Pay, the purchase amount including taxes, fees and applied discounts, shipping options and contact information.

Anything else, such as store pickup selection, coupon codes, gift options, special instructions, memberships or donations, email opt-ins, split shipments or account creation must be handled before or after payment. If any of these options are requested within your default checkout flow, you must sacrifice them or redesign your cart page and checkout (which may or may not be possible with your ecommerce platform, or require significant development work).

Building a case for Apple Pay

Apple Pay may be worth a trial when:

  • Your mobile traffic is greater than 75%, with a high percentage of iOS users
  • You serve a younger, tech-savvier customer base that both uses and prefers mobile wallets
  • You don’t already offer two or more alternative payments (e.g. PayPal, MasterPass, Visa, Amazon Pay) -- too much choice can lower conversion
  • You offer a native iOS app
  • Account creation is optional, not required
  • Your checkout doesn’t involve custom fields not included in a standard Apple Pay payment sheet

Only a slice of all iOS users have set up and regularly use Apple Pay. To calculate the value Apple Pay may have to your business on a monthly basis:

1. Multiply your monthly iOS visitors by .27 to estimate number of Apple Pay users
2. Multiply your existing iOS conversion rate by 1.2 (a generous estimate, but in line with reported merchant case studies)
3. Multiply monthly Apple Pay users (1) by adjusted conversion rate (2)
4. Multiply (3) by your iOS segment’s average order value

While Apple Pay is increasingly offered by ecommerce platforms and payment gateways, it’s not a silver bullet for digital merchants. If you’re struggling with mobile conversion, ensure you’re regularly improving mobile checkout usability and site performance.

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