Apple Pay and mobile wallets continue to be big news in payments. While some analysts point to slower than expected growth, there is a deeper, more positive story behind the headlines. With recent technical innovations, Apple Pay is poised for growth, particularly for web and mobile payments. For eCommerce merchants, Apple Pay support is likely a must-have payment method going forward. Readers who are interested in a more technical view of Apple Pay should check out our article Apple Pay on Vantiv.

An Apple Pay refresher

For those who don’t follow payments closely, Apple Pay is a feature of the latest iPhones and the Apple Watch. With Apple Pay, payment card details can be stored in a wallet app on iOS, enabling consumers to pay with their phone (or in some cases, their tablet) in different ways:

In-Store – using the NFC capabilities for “tap” checkout at the point of sale

In-App – enabling one-touch payment from within a payment capable iOS apps

Online – the most recent innovation in Apple Pay, enabling eCommerce websites to recognize Apple Pay capable devices, and offer one-touch payments at checkout

While consumers often think of Apple Pay from the perspective of in-store payments (currently the most visible use case), it turns out that web payments are where the action is.

The deeper story behind Apple Pay adoption statistics

In March of 2017, PYMNTS and Infoscout released their latest market research around Apple Pay adoption. As of March 2017, only 21.9% of surveyed consumers self-identified as having tried Apple Pay, according to Infoscout, leading many to suggest that adoption had stalled. While this is an important data point, there are other important factors to consider as well.

During Apple’s Q4 2016 earnings call, Apple pointed to Apple Pay transaction growth of almost 500% vs the year before, with Q4 2016 Apple Pay revenue exceeding revenue for all 2015 – impressive growth that is hard to argue with.

vs the year before, with Q4 2016 Apple Pay revenue exceeding revenue for all 2015 – impressive growth that is hard to argue with. US shoppers spent $22.7 billion USD in eCommerce purchases from mobile devices in Q4 of 2016 according to comScore, a 45% increase over the same period last year showing enormous growth in mobile payments (a different statistic than mobile wallets, but an important indicator nonetheless).

in eCommerce purchases from mobile devices in Q4 of 2016 according to comScore, a over the same period last year showing enormous growth in mobile payments (a different statistic than mobile wallets, but an important indicator nonetheless). In the same Infoscout research cited above, fully 95% of respondents viewed Apple Pay as offering the same or better convenience than paying with a payment card.

What do we take away from all this research? The story is complex, but consider that most credit card purchases take place in-store at retail locations. As a result, surveys tend to reflect the predominant in-store, NFC/tap use case for mobile wallets. Looking at in-store statistics only can miss a critical point. According to separate research by McKinsey, the fastest growth in digital wallets (including mobile wallets like Apple Pay) is taking place in eCommerce/mCommerce payments. Payments made via digital wallets are expected to exceed $1 trillion by 2020, with mobile wallets seeing a 50% CAGR to $400 billion. In other words, by far the fastest growing market for mobile wallets is in eCommerce, with point of sale transactions expected to make up only a tiny portion of digital wallet payments by 2020.

Apple Pay on the Web is a game changer

Apple Pay on the Web is a new technology that helps merchants operating eCommerce sites easily add Apple Pay as a payment option. Most of us who have experienced the tedious process of keying in details like payment credentials, and shipping or billing addresses on a tiny phone keyboard. This is precisely the reason that according to Barilliance, users abandon shopping carts on mobile devices at a rate of 85.6%.

Apple Pay on the Web solves the checkout problem for consumers and merchants alike. It allows consumers on a suitably equipped iOS device to securely make a payment and relay personal information to a merchant with a single touch. This means that smaller online retailers can offer the same level of payment convenience as best in class providers like Amazon, offering one-touch payment for first-time purchases.

What does this mean for merchants?

While Apple Pay on the Web is still young, it is a critical enabler for eCommerce merchants. Fully 50% of eCommerce purchases already involve stored credentials, according to McKinsey, and as one-touch checkout becomes the norm, it will be a convenience that consumers demand.

For eCommerce merchants, the challenge is how to implement Apple Pay on the Web quickly and cost-efficiently in a way that minimizes disruption to existing systems and processes. Also, while Apple Pay is the dominant mobile wallet at present, merchants need to take an approach that makes it easier to adopt additional digital wallets in future from their eCommerce or mobile websites.

Vantiv offers a comprehensive set of developer resources for the Apple Pay API on Vantiv O.N.E. at http://developer.vantiv.com. Create your free account to access the Vantiv O.N.E. Apple Community.