While 66 percent of iPhone 6 and 6 Plus owners surveyed had signed up for Apple Pay, repeat usage is being hurt, the study by Phoenix Marketing International said. Almost half of users visited a store listed as an Apple Pay merchant only to find they couldn’t use the service because the location wasn’t actually accepting the system or wasn’t ready to do so, according to the survey, which drew about 3,000 respondents.

Apple Inc.’s new mobile-payment system is failing to capture all of its potential business, according to a survey, with two-thirds of users reporting problems using the service at the checkout counter.


“They’ve created demand, but it can’t be fulfilled,” Greg Weed, Phoenix’s director of card research, said in an interview. “To make it more difficult to use or to create any uncertainty in your customer base as to whether it’s going to work is just going to slow it down.”

Chief Executive Officer Tim Cook is relying on the new system to help expand Apple’s reach by offering new services for iPhone users. The biggest US banks and credit-card networks are using Apple Pay to help accelerate US adoption of mobile payments and keep in control of their transactions. At stake is a market that’s likely to process $67 billion worth of sales this year, according to Forrester Research.

Apple declined to comment on the survey, which was conducted at the end of February, four months after Apple Pay was introduced.

Apple Pay, which uses short-range wireless signals known as near-field communication, essentially turns an iPhone 6 or 6 Plus into a digital wallet. The system works only at stores that have upgraded their cash registers to accept chip-embedded credit cards. It’s now supported by 2,500 banks in the US and about 700,000 locations accept it, Cook said this month.


“It’s gotten off to the most amazing start,” Cook said at an event to unveil features of the company’s Apple Watch.

Samsung Electronics Co. earlier this month unveiled its own mobile-transaction system, Samsung Pay, which will be available in the third quarter in the US and South Korea. The technology works at checkout terminals that use older, magnetic-stripe technology, as well as NFC. Google Inc., which already has a mobile wallet, has also said it plans to expand in the business and is working on a new service called Android Pay.

The average Apple Pay user made 2.6 in-store transactions using the system in its first four months, the survey by Rhinebeck, New York-based Phoenix found. Almost half used it to purchase something inside an Apple store, while almost a third used it at Macy’s Inc. Thirty-six percent of Apple Pay customers used it at McDonald’s Corp.

The majority of people who used Apple Pay said they did so because it was faster than a traditional credit card. Almost 60 percent they were using it because “it’s new, stylish or cool,” while 58 percent said they thought it was safer than a normal credit card. About half of users said it was good for medium-sized purchases.

Of the problems that occurred at merchants, 48 percent of those surveyed said it took too long to record the transaction, while 42 percent said the cashier was unfamiliar with Apple Pay and unable to help. Other complaints included transactions that incorrectly posted, or were counted twice.


The complaints are just some of the challenges Apple faces as it brings out a new payment system. Apple Pay has also been hit by fraud. Some banks have made changes in how they activate customers’ credit-card accounts after reports that criminals were typing stolen credit-card numbers into Apple Pay and trying to make purchases with their iPhones. Some issuers have found that up to 8 percent of Apple Pay transactions were fraudulent, compared with 0.1 percent on traditional payments cards, said Julie Conroy, an analyst at Aite Group.

Still, Apple iPhone 6 users have been eager to load their credit cards onto their new phones, according to the biggest US card issuers and networks.

More than 800,000 Bank of America Corp. customers have loaded 1.1 million cards onto Apple Pay, while JPMorgan Chase & Co. has said that there’s been “good growth” in the number of cards its customers are loading, particularly among younger customers who have a higher income. Visa Inc., the world’s biggest payments network, said that 43 banks, representing 75 percent of volume on its US network, have enrolled to use the token system on iPhones to authenticate purchases.

“People are seeking out places to use Apple Pay,” said Bill Gajda, head of innovation and strategic partnerships at Visa, at an investor conference. “We like the uptake particularly given the acceptance gap.”

The lack of merchant locations and terminals not working were also cited as top issues by repeat Apple Pay users in a separate survey released Monday by Citi Research. Sixty percent of Google Wallet users in the same survey cited no issues or concerns. Thirty-two percent complained about limited Google Wallet merchant locations.


A new US standard is requiring that merchants and banks switch from a card system using magnetic stripes toward chips because the technology is more effective at preventing fraud. While the deadline for that conversion is in October, only about a third of US cash registers had been converted at the end of last year, a figure expected to rise to a half by the end of 2015, according to data from an industry group.

The cost to banks and retailers to upgrade their systems to EMV chip technology -- named for developers of the technology, EuroPay International, MasterCard, and Visa -- has been part of why it’s taken so long to come to the US. While recent data breaches like the one at Target Corp. have provided a catalyst for the conversation, retailers and banks continue to be at odds over whether chip cards should require customers to enter a PIN or their signature to authenticate the card. Anything that slows down the EMV conversion is likely to make it more difficult for Apple Pay customers to find places to use the device.

“Apple is riding on this EMV wave and they are beholden to a glacial speed of progression because nothing changes overnight in payments,” said Nick Holland, a payments analyst at Javelin Strategy & Research. “It’s frustrating -- for Apple and Apple Pay users.”