For years, tech companies have dreamed of a future in which people ditch their wallets and pay for things with their smartphones. And for years, that has not happened.
But Apple may be on to something.
In the three weeks since the company released Apple Pay, its first stab at a mobile wallet, some major retailers are seeing a wave of consumers eager to check out at the register with their iPhones.
And even some of Apple’s competitors, like Google and Softcard, say Apple has helped create general awareness of mobile payments, including for their services.
Whole Foods, the high-end grocery chain, said it had processed more than 150,000 Apple Pay transactions. McDonald’s, which accepts Apple Pay at its 14,000 restaurants in the United States, said Apple Pay accounted for 50 percent of its tap-to-pay transactions. And Walgreens, the nationwide chain of drugstores, said its mobile wallet payments had doubled since Apple Pay came out.
Apple Pay is still far from a dominant payment system. But the retailers’ numbers are the first faint signs of a mainstream willingness to stray from cash and cards. Apple, analysts say, has tapped into something.
Whole Foods, the grocery chain, said it had processed more than 150,000 Apple Pay transactions since the service started. Eric Risberg/Associated Press
"Quite frankly, a lot of it has to do with the strength of the Apple brand and how much merchants and customers love how easy the experience is,” said Denée Carrington, an analyst with Forrester Research. “I’m not saying it’s changing the landscape overnight. But this has never happened with other mobile wallets.”
Not all retailers are blown away just yet by early adoption of Apple Pay. Toys “R” Us, which supports Apple Pay in all of its 870 stores, said that although the number of mobile payments at its stores increased after the introduction of Apple Pay, there were still relatively few mobile payments because customers were still learning about the new technology.
But Softcard, Google and other companies that also offer mobile wallet products, say that Apple’s entrance may be good for all players that offer mobile payments.
“Apple Pay has been a huge tailwind,” said Michael Abbott, chief executive of Softcard, a mobile wallet backed by AT&T, T-Mobile and Verizon.
Mr. Abbott said that because of Apple, many companies now want to support the same technology for paying by phone: near-field communication, which enables devices to exchange information wirelessly over very short distances. This consistency would help make paying for things with a smartphone less confusing for shoppers.
Since Apple Pay was released, the Softcard app has been downloaded more often by new customers and used more frequently by its existing members, according to Mr. Abbott.
Last week, Google said its mobile payment product, Google Wallet, had also been used more after Apple Pay’s release.
“It’s a rising tide that has lifted all boats,” Mr. Abbott said.
Mobile payments have quickly been growing more popular, but over all, spending with a smartphone is low. The research firm Gartner estimated that worldwide, people spent $235.4 billion through mobile payments in 2013, compared with $163.1 billion in 2012. But that number is much smaller in North America, where consumers spent about $37 billion through mobile transactions in 2013, up from $24 billion the previous year.
Jan Dawson, a telecom analyst for Jackdaw Research, said that the hurdle for Apple Pay was that only the latest Apple phones, the iPhone 6 and iPhone 6 Plus, support it. Also, there are still many American merchants who do not support mobile payments. So it will probably take several years before Apple Pay becomes mainstream, he said.
“Apple Pay is going to be a slow-burn success,” Mr. Dawson said. “Until then, it will be something of a novelty and something that most consumers use occasionally if they use it at all. That’s still enormous progress.”
