Apple Pay Still Growing While Icahn Professes Love For Apple Inc.

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Apple Pay’s user base continues to grow, albeit quite slowly among consumers. A recent survey indicates that merchants are quickly picking up the technology and installing support for it at their points-of-sale.

Consumers are still a little leery about the payment service, as they’re adopting it at a much slower pace. Apple Pay (and everything Apple does) gets a big thumbs up from Carl Icahn, who wrote what basically amounts to a public love letter to CEO Tim Cook today—which naturally comes with another strong suggestion from the activist investor.

Merchants rapidly adopting Apple Pay

In a report dated May 17, Goldman Sachs analyst James Schneider, Ph.D. and his team shared the results of their recent survey on Apple Pay. They have been following the progress of the payment service over the eight months since Apple launched it.

They found that merchant adoption continued to climb, with large retailers being the most likely to add support for Apple Pay. Small- to medium-sized businesses are lagging behind large retailers, however. Late last month, Best Buy announced plans to start supporting Apple Pay at its retail locations later this year.

Home Depot also said recently it will begin to support the payment service, although the home improvement retailer has not finalized terms with Apple to support the service. If Home Depot does seal a deal, however, then it would be the biggest retailer to sign up for Apple Pay so far, according to Schneider and team.

In the last seven months, the number of retailers supporting Apple Pay (All graphs in this article are courtesy Goldman Sachs.) has grown to 67 national merchants and 61 apps. The service also now covers about 90% of U.S. credit card purchase volume, including the recently announced deal with Discover Card to support it.


Consumers slowly picking up Apple Pay

Consumers are less enthusiastic about Apple Pay so far. The Goldman Sachs team reports that more and more people seem to be trying out the payment service, but it seems as if the number of consumers who use it again is low.

A survey from InfoScout and covered over a thousand iPhone 6 owners and found that the number of consumers who had tried it only increased from 4% in November to 9% in March. The percentage of repeat users edge up just a bit from 5% to 6% in the same time frame, however.

The Goldman Sachs team said the numbers imply that about 85% of iPhone 6 users haven’t tried Apple Pay yet. They also report that the survey indicates that about 4 million people have signed some of their cards since the service launched and tried it at least once. Further, they estimate the number of regular users at about 1.6 million.


The Goldman Sachs team is not surprised with the survey results, as they expected consumer adoption to be gradual.

Rewards a big factor in using Apple Pay

The Goldman Sachs team noted that competition in the mobile payments space is heating up, so Apple Pay will face new competition from Samsung Pay and MCX later this year. However, they think competitors must find a way to set themselves apart from other providers, potentially through the integration of rewards.

They think adding rewards will be an important step in spurring consumer adoption of Apple Pay and other mobile payment services. The survey from PaymentScout and indicated that rewards do play a significant role in whether consumers will use Apple Pay


The Goldman Sachs analysts expect Apple Pay to add loyalty and rewards programs later this year using Bluetooth and iBeacons. They think Apply Pay could activate these programs automatically based on where consumers are located inside a merchant’s brick-and-mortar location. They added that purchases could then be linked to the rewards programs through Bluetooth rather than the se of rewards codes that are scanned.

They said the result would be “a more seamless transaction” for consumers.

Security concerns about Apple Pay waning

Despite security concerns like the one that allows thieves to be able to access someone’s Apple Pay account by stealing their Apple Watch with a slight of hand move, the payment service is still catching on. In fact, consumers appear to be worrying less and less about security when it comes to mobile payments.

Apple Pay combines the user’s fingerprint with EMV in an attempt to fight fraud associated with fake or stolen credit cards. At first, consumers thought physical cards were still more secure than the payment service, but the Goldman Sachs team thinks consumers now understand the security benefits of mobile payments better and are less worried about security.


Carl Icahn’s in love with Apple and Tim Cook

Today Carl Icahn sang Apple’s praises in a public letter sent to CEO Tim Cook. He said he thinks Apple stock is now worth a staggering $240 per share, which is nearly double where it’s trading at today. Icahn told Apple what he’s expecting from the tech giant, including entry into the TV market and the auto market by 2020. He said Wall Street doesn’t appear to be including these rumored products in its valuation of Apple.

The activist investor patted Cook on the back for following his advice and buying back $80 billion worth of its shares but also urged him to help him convince the board of how “insufficient net cash growth and share undervaluation” will “combine to enhance the opportunity for accelerated share repurchases in greater magnitude.”

Further, he talked about all the rumors about an Apple TV and other products as if they’re a given, which of course they are not. He even included a reference to the rumored 12.9-inch iPad Pro.

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