Apple is Dominating Contactless Payment—For Now

Eight long years of patience is paying off for Apple, which is seeing adoption of Apple Pay outpace competitors like Google Wallet. But bipartisan support for the American Innovation and Choice Online Act could threaten both companies’ ambitions.

Apple’s Al Maryah Island Store. Courtesy of Apple.

It’s hard to imagine an Apple launch underwhelming the public. Post-pandemic, it’s harder still to imagine iPhone owners not clamoring to make use of the company’s digital wallet, which allows for the convenient, contactless use of everything from credit cards to airline boarding passes and even driver’s licenses and state IDs.

When Apple Pay first debuted in 2014, however, both users and retailers were less than charmed. At the time, only three percent of retailers in the U.S. accepted contactless payments, and by 2016 only ten percent of iPhone owners were using it. Eight long years of patience is paying off for Apple, which is seeing its contactless payment service outpace competitors like Google Wallet. Today, the company claims that 75 percent of people with iPhones have activated the feature and a whopping 90 percent of retailers now accept contactless payments.

In Arizona, Apple wallet users can use the app to present their driver’s license or ID to the TSA in Phoenix Sky Harbor International Airport. Courtesy of Apple.

According to the Wall Street Journal, Apple Pay’s success is notable because it flies in the face of the tech industry’s tendency to expect new features or products to perform very well upon launch, and summarily phase them out if they fail to live up to expectations. In other words, Apple waited it out, even as the adoption of contactless payments lagged for years.

Apple’s patience stands in contrast to fellow tech behemoth Google, which has failed to create a consistent contactless payment system. Since its 2011 launch, Google Wallet has been redesigned, retired, and relaunched so many times that CNET has devoted an annotated timeline to explain its convoluted life cycle. While Google was busy consolidating codebases and playing into a seemingly endless cycle of launch-pivot-deprecate-relaunch with its own contactless payment feature, Apple’s consistency allowed it to become synonymous with the technology itself.

“I’ve literally never heard anyone ask, ‘Do you accept Google Pay or Samsung Pay?’ It’s possible that no one is using either service, but I think it’s more likely that people just think of anytime you tap your phone to a card reader as Apple Pay,” tech columnist Jason Aten wrote for Inc. That level of name recognition represents a lot of potential power for Apple and its competitors in the space. In 2021, the contactless payment industry was estimated to be worth upwards of $1.7 trillion and by 2028 it could reach $6.25 trillion. But bipartisan support for antitrust legislation, like the American Innovation and Choice Online Act, could threaten the ambitions of both companies.

Apple’s Brompton Road Store. Courtesy of Apple.

“As dominant digital platforms—some of the biggest companies our world has ever seen—increasingly give preference to their own products and services, we must put policies in place to ensure small businesses and entrepreneurs still have the opportunity to succeed in the digital marketplace,” Senator and bill sponsor Amy Klobuchar said after the Senate Judiciary Committee permitted the American Innovation and Choice Online Act to advance to the full Senate.

The American Innovation and Choice Online Act has bipartisan support and could prevent Apple and Google from pre-installing apps like their respective digital wallets on new devices, according to Bloomberg. Forcing users to seek out and download apps for themselves creates “friction,” in tech parlance, increasing the likelihood that users may choose another app (or none at all) when presented with the option. Though the bill hasn’t yet advanced to the senate floor, Apple may be making moves to get out ahead of the legislation: In late August, TechCrunch noted that code in the developer beta for iOS 16.1 seems to suggest iPhone owners will be allowed to delete the Wallet app—a first in its eight-year existence.

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