Eye on Apple Pay: Analytics Firm IDs Leading Merchants

A San Francisco analytics company with access to transaction data on 3 million consumer credit and debit cards says usage of Apple Inc.’s Apple Pay mobile-payment service rose steadily in 2016. TXN Solutions Inc. also says that among brick-and-mortar merchants Apple Pay usage is highest at New York City-area pharmacy Duane Reade and upscale grocery store chain Whole Foods Market Inc., although the service still accounts for less than 2% of payment card transactions at both merchants.

TXN recruits consumers through online and mobile channels and gives rewards, such as Amazon.com Inc. gift cards or game points, to encourage them to register their cards with it so it can track transaction patterns for its merchant clients via secure Internet connections. The company found that transaction data from some card issuers indicated that the cardholder made an Apple Pay purchase with an Apple iPhone or Watch, chief executive Jonathan Wolf tells Digital Transactions News.

Culling those flagged transactions and then indexing them to a base of 100 at Dec. 1, 2015, TXN says the index stood at 150.4 on Dec. 1, 2016, indicating a 50% increase in Apple Pay transactions during the year on the registered cards. “It’s definitely picking up,” says Wolf.

TXN also matched by the Apple Pay transactions across e-commerce and point-of-sale merchants. The highest of the mixed group was HotelTonight, a last-minute hotel-room booking site where Apple Pay accounted for 3.4% of all payment card transactions. The next three highest were all restaurant-meal delivery services: Caviar (which happens to be owned by merchant acquirer Square Inc.), Postmates and DoorDash, where Apple Pay’s share of card transactions was 3.27%, 2.69%, and 2.43%, respectively.

Duane Reade, the New York unit of drug-store giant Walgreens Boots Alliance Inc., led the brick-and-mortar merchants with Apple Pay capturing 1.8% of card purchases. Next was Whole Foods at 1.69%. Canteen Vending took third place at 0.98%. Both Duane Reade and Austin, Texas-based Whole Foods were Apple Pay launch partners and have promoted the service, says Wolf.

The POS merchants where Apple Pay usage is highest are “without exception” establishments such as grocery stores, restaurants, and coffee shops that consumers could visit daily or weekly, he says.

Among the e-commerce-only Apple Pay acceptors, Boxed Wholesale, an online competitor to warehouse stores such as Costco, led the pack with Apple Pay taking 1.99% of card transactions. In second place was gift-card exchange Raise at 1.7%.

Apple announced Apple Pay in late 2014. Wolf says that while Apple Pay’s share of payment transactions remains small, an increasing number of consumers are getting used to pulling out their smart phone to make a purchase.

“That’s a new instinct for us to pick up,” he says. “I don’t know if it will become a ubiquitous way for us to pay for things, but I think the trend will continue to grow.”