Apple Pay adoption is lagging in the US — but Apple Card could change this

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Just 9% of US consumers used Apple Pay last year. This is far behind the five most-popular US payment methods, which were credit cards (80%), cash (79%), bank or debit cards (59%), checks (53%), and PayPal (44%), according to a survey from Bain cited by CNBC.

The wallet's US adoption is also trailing compared with other countries: 17% of consumers in China used Apple Pay in 2018, for example. This gap is due, at least in part, to mobile payments services' lack of popularity in the US, as over 80% of consumers in China used mobile payments in 2018 while the top US major payment apps were used by less than 10%.

Apple Pay's position in the US may be improving, however, as CEO Tim Cook recently stated that it's adding more new users than PayPal and its monthly transaction volume is rising four times as fast. For context, PayPal reported that it added 9 million accounts in Q2 2019 and that its number of payment transactions rose 28% year-over-year (YoY) for the quarter.

Here's what it means: Apple Pay's adoption in the US has been underwhelming, but there are two recent developments that could see its popularity surge.

The launch of Apple Card gives consumers new incentives to use Apple Pay and could even boost the service's merchant base. The Goldman Sachs-issued card offers 2% cash back on all purchases through Apple Pay as well as 3% cash back on Apple Pay purchases from Apple and select businesses, including Uber, compared with 1% for transactions using its physical companion card. This should entice Apple Card users to regularly use Apple Pay — and if the card is successful in attracting non-Apple Pay users, it'll boost the service's adoption. Additionally, if more consumers want to use Apple Pay, more merchants will want to accept it, which would make Apple Pay more ubiquitous and potentially propel its adoption in the US.

US transit systems are starting to roll out contactless payments, which is a major opportunity for Apple Pay to showcase its convenience. Both New York City's and Miami's transit networks have begun integrating contactless payments for fares through contactless cards and mobile wallets like Apple Pay, with morecities planning to do the same. Early on, mobile wallets have accounted for 80% of contactless transit payments in New York, likely because tapping a phone is easier than taking out a card and tapping it before putting it back. So, as more cities add contactless payments to their transit networks, more consumers may begin using Apple Pay, which could lead to them using the service for other purchases.

The bigger picture: Apple Pay's potential growth would be good news for other mobile wallets, as greater interest in Apple Pay could boost their profiles too.

Other mobile wallets will likely see greater adoption and acceptance in the coming years — and that could be partially due to Apple Pay.Wallets like Samsung Pay and Google Pay will be accepted for transit payments as well, so the advent of contactless transit payments will likely boost their adoption rates alongside Apple Pay's bump.

Additionally, if more merchants begin accepting Apple Pay, they may add acceptance for other wallets at the same time to avoid alienating consumers; for context, 50% of US restaurants and retailers accepted mobile payments as of October 2018. This would open the door for more people to experiment with wallets and potentially lift mobile payment adoption in the US.

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