Apple Pay Is Killing the Physical Wallet After Only Eight Years | WSJ Tech News Briefing

[Music] this is your tech news briefing for tuesday august 23rd i'm zoe thomas for the wall street journal back in 2014 a week after apple launched its new contactless payment system apple pay ceo tim cook spoke at the wall street journal's big annual tech conference where he was asked about reports that some big name u.s retailers were refusing to accept apple pay cook characterized the standoff with the retailers as a skirmish and struck a positive tone about apple pay's future now we've got a lot more to go we've got a lot of merchants to sign up we've got a lot more banks to sign up and we have the whole rest of the world we're only in the us right now and so we're just getting started uh but the early ramp looks fantastic and i'm getting that sunny outlook well it seems like it's finally come to pass and it seems like everyone is using apple pay it just took eight years with the speed the tech typically moves that duration and the steadfast belief that a product will live up to its goals despite initially slow adoption is rare joining us to discuss what apple's endurance can teach the tech world is ben cohen the wsj's science of success columnist hi ben thanks for joining me hi thanks for having me so plot this course for us that apple took from you know it's launch to now how did it increase usership of apple pay when it looked like in the beginning this wasn't really going to happen for it yeah in the beginning apple pay was sort of widely dismissed and almost mocked i mean no one really thought that it would be a success and for a very long time it wasn't so apple pay was introduced in 2014 by 2016 only 10 of iphones had activated apple pay by 2017 that number was only 20 and so three years into the service by which time tim cook had already declared 2015 to be the year of apple pay and in 2016 said that it was happening much faster than he anticipated it really did not look like it was going to be a consumer hit and yet the adoption rate doubled the next year and then it hit 50 by the start of the pandemic and now the activation rate for apple pay on iphones is around 75 percent yeah it's interesting because tim cook and apple seem to have so much faith that apple pay was gonna pay off for it but how did it get that kind of adoption when it looked like it was moving so slowly how did they get to a 75 activation rate so there were a few things the first is that they were very very annoying and sometimes pestering can help so there was a while when if you hadn't activated apple pay you would see this little red bubble on your iphone that you wanted to you know get rid of and so people started adding their credit cards and debit cards to the apple wallet just so they would have a cleaner iphone to look at but that was one thing but the real thing was that they needed the rest of the world and especially the united states to catch up to their vision of the future so when apple pay was introduced only about three percent of retailers and stores in the united states had the technological infrastructure for contactless payments so if you tried to use apple pay you wouldn't have been able to in the beginning that number is now 90 apple says so some of it was waiting for stores to get there and the rest of it was humans and human behavior had to change so when apple looked at the rest of the world and the way that europe especially used contactless payments they saw that they were several years ahead of the united states and that gave them confidence that americans weren't so different from the rest of the world it would just take a little bit of time to catch up and then the last thing that that happened that really accelerated the growth of apple pay and changed its trajectory was the pandemic and you know there was a time when people did not want to hand their cards over to cashiers or stick their credit cards into terminals and just being able to hold your phone near a reader was a much more preferable option how did they get the stores on board how did they start getting more places to accept apple pay in part because more people wanted to use apple pay right you know some of it was just time for stores to upgrade their own technological infrastructures and add contactless terminals so this was never going to happen overnight and i think apple knew that and you know sometimes it can be hard for companies to stay patient but you know the long game is an indulgence that the world's richest corporation could afford right like if there were anyone that could afford to be patient it was apple and i think this is sort of a case study and how valuable that patient can be in business sometimes yeah let's let's talk about that a little bit i mean why did apple even stick with this to get apple pay kind of to this level in the first place for one thing you know they had data from other parts of the world that suggested it was going to work even if it wasn't quite working in the united states already but the second thing is that this is not just about how we spend money in restaurants or at stores right i mean apple is really trying to make the physical wallet obsolete they want your phone to replace the wallet and that means putting credit cards on your phone it means putting your driver's license and id and insurance cards on your phone i mean there is research that human beings would rather leave home without their wallets than without their phones and if apple can come up with a service like this that makes the iphone more useful and more valuable that is just you know incredibly beneficial to their bottom line is this something though that another company could have pulled off i mean you called it an indulgence tech is known for kind of that move fast and break things culture so could other companies afford to wait around for a new technology or for consumer habits to change probably not right and not just wait around for consumer habits to change but make those consumer habits change like have the market power and the sheer force of will to kind of bend human behavior to their favor but i think it's worth keeping patients in mind because i think that moving fast and breaking things has become like for a while it was so popular among tech companies and and that kind of ethos trickle down to all sectors of society and i think that you know patience is kind of undervalued all right that's wsj science of success columnist ben cohen ben thanks so much for joining us thank you for having me and that's it for today's tech news briefing if you're looking for more tech stories check out our website wsj.com and if you enjoy the show please leave us a five star rating and a review wherever you get your podcasts it really does help i'm zoe thomas for the wall street journal thanks for listening [Music] [Music]

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Keywords: apple pay, apple, apple pay explained, apple wallet, digital wallet, contactless payment, contactless credit card, contactless debit card, iphone, iphone apple pay, tim cook, apple pay on iphone, credit card, credit card payment, payment method, digital payments, apple strategy, apple business strategy, business strategy, apple pay method, how apple pay works, apple pay how to, apple pay business model, apple products, apple 2022, apple news, apple pay news, tech news

Id: wAZZ-UWGVHI

Length: 7min 27sec (447 seconds)

Published: Tue Aug 23 2022