The United States consumer base is increasingly mobile-centric. Approximately 6.9 million Americans used mobile wallets to make in-store purchases, accounting for 6.2% of all transactions. Apple Pay represents just more than half of the mobile wallet landscape, with 3.8 million consumers representing 3.5% of all transactions. As with most newer technologies, the demographic skew leans toward younger and higher-income consumers. While these consumers use mobile wallets more often, older and lower-income individuals use them less often. The same trend holds for Apple Pay users, with millennials, Gen Z, higher-income individuals and those with children showing above-average usage rates. Overall, consumers use mobile wallets most frequently for more everyday purchases, including groceries, fast food, clothing and accessories.
Following the pandemic bump in digital wallet adoption, Apple Pay has continued to expand its reach. An increasing number of merchants now accept this payment method, even though only consumers with an iPhone can use the method. As of September 2023, consumers with iPhones who purchased in a store that accepts Apple Pay used the payment method 7.8% of the time. While this is a greater rate than last year, it is a modest uptick from eight consecutive years of rates of roughly 6%. Apple Pay now accounts for 3.2% of all in-store retail purchases. The pandemic-fueled Tap to Pay trend in stores may have contributed to the increased use of mobile wallets, including Apple Pay, but the one-off nature of this growth makes it unclear if this will continue.
This report explores consumers’ evolving uses of Apple Pay at the point of sale. For “Apple Pay @9: The Battle for In-Store Adoption and Usage,” PYMNTS Intelligence surveyed 2,077 U.S. consumers between Sept. 1 and Sept. 13 to better understand long-term trends influencing consumers’ adoption of mobile wallet use at the physical point of sale, and in particular, Apple Pay, on the anniversary of its launch.
Key Findings
Of the estimated 6.9 million Americans who used a mobile wallet to pay for their most recent purchase in the store, roughly half, or 3.8 million, used Apple Pay.
Overall, the share of eligible purchases — when a customer with an iPhone purchases in a store that accepts Apple Pay — increased from 6.3% in 2022 to 7.8% in 2023. All other digital wallets saw this share either decrease or remain stable, as millennials, high-income consumers and those with children showed above-average usage. Overall, consumers made 6.3% of their most recent purchases with mobile wallets. Generation Z made 10.6% of their recent purchases using a mobile wallet; millennials did so for 9.1% of their most recent transactions.
Convenience drives mobile wallet usage, with more than 60% of mobile wallet users reporting that this factor motivates them to use it. This motivation is even more pronounced among Gen Z consumers, with 86% reporting convenience as a pivotal reason to use mobile wallets. This may be related to the types of purchases these consumers make and where consumers use them the most. For in-store purchases, consumers largely use Apple Pay for grocery purchases. In contrast, they use Apple Pay for online purchases for clothing and accessories the most, followed by fast food from a quick-service restaurant (QSR).
While Apple Pay experienced growth this year, usage is minimal compared to more common payment methods such as debit and credit cards.
The share of eligible in-store transactions with Apple Pay grew 24%, from 6.3% in 2022 to 7.8% in 2023. This is the first time the share has significantly increased to be higher than the 6% range in the last eight years. It is likely that the expansion of contactless Tap to Pay use cases in-store, which is how iPhones communicate with POS devices, impacted this.
That said, Apple Pay’s in-store competition remains cards, outpacing Apple Pay transactions. Specifically, consumers used debit or credit cards for 68% of non-grocery retail and 72% of grocery in-store purchases, maintaining their dominant position as consumers’ primary payment tools.
Apple Pay users are loyal to the payment method. There just are not enough of them to drive scale and retail share.
Consumers using these mobile wallets say a merchant’s acceptance of the method, specifically Apple Pay, significantly influences their purchasing decisions. Most consumers who use mobile wallets, 67%, opt for a specific online merchant based on the merchant’s acceptance of their chosen mobile wallet. Fifty-four percent make the same decision for in-store purchases.
Two in three Apple Pay users will make online purchases from a merchant specifically due to its compatibility with this payment option. Merchants representing 81% of retail dollars now have the necessary technology to accept Apple Pay, up from 75% in 2022. Despite this, 92% of iPhone users still do not use Apple Pay when completing in-store purchases. After nine years, we see a loyal fan base, but one whose ranks are not necessarily growing.
A Look into Apple Pay Later
In March of 2023, Apple introduced Apple Pay Later to its portfolio of Apple Pay products. This product allows users to apply for loans of between $50 and $1,000 and repay the loans in four payments with no fees or interest. We have seen increased interest in split pay programs throughout the last several years, and this is Apple’s foray into this space.
In its first six months, it has garnered some interest. Five million U.S. consumers used Apple Pay Later for at least one of their purchases in the last week. Most of this usage was online, and consumers used Apple Pay Later for a small number of overall purchases. In fact, 3.8 million consumers used Apple Pay in-store, but they used Apply Pay Later for just 500,000, or 13%, of these purchases.
As with Apple Pay in general, younger and higher-income customers are more likely to use this product. However, in this case, Apple Pay Later also sees significantly higher usage rates among consumers living paycheck to paycheck. Moreover, out of the total users of Apple Pay Later for in-store purchases, 44% purchased pharmaceuticals or health products.
While Apple Pay Later’s adoption is on the rise, it still represents a relatively small subset of the broader mobile wallet user base.
Conclusion
Brands and merchants looking to expand their consumer base and retain loyal customers must take note that convenience is the primary factor driving mobile wallet adoption. Consumers are turning to mobile wallets for various of reasons, reflecting the evolving landscape of digital payment preferences. Though Apple Pay’s perceived convenience has given it an edge over competitors, its use still represents a small fraction of in-store transactions, even after 24% growth in-store this year. This report’s findings emphasize that, ultimately, Apple Pay users stay loyal to the payment method. Still, at this point, there is not enough scale and share of retail sales to tell if this is the beginning of a trend or a temporary bump.
Methodology
“Apple Pay @9: The Battle for In-Store Adoption and Usage” is based on a survey of 2,077 consumers conducted from Sept. 1 to Sept. 13. The sample was balanced to match the U.S. adult population in key demographic variables. Respondents were 51.2% female, with an average age of 45.1. Additionally, 38.5% of our sample held a college degree, and 42% annually earned more than $100,000.
