Is it really that much of a surprise that contactless payments have become one of the predominant methods in the US?
The Land of the Free and the Home of the Brave may be slower than its counterparts across the pond when it comes to payment innovations, but it is mirroring the digital payment boom that has spread all across the world.
Integral to the growth of contactless digital payments was the introduction of Apple. Needless to say, Apple is one of the largest companies on Earth and by leveraging its mobile user base of over one billion people, its integration of Apple Pay has been as seamless of a success story as one may have envisaged.
According to Capital One’s digital wallet statistics published last July, an estimated 60 million plus users in the US will use Apple Pay in 2024. It also projects that its users will increase to 75 million by 2030.
TD Bank Head of Commercial Digital Platforms, Paul Margarites, told Payment Expert that mobile payments like Apple Pay have seen “exponential growth” across the past several years, but does recognise that the US has been slower to adopt as other traditional methods continue to take precedence.
He said: “Mobile payments, especially those of real-time payments, have seen exponential growth in the US over the past five years, and it has ramped up over the last two years.
“Adoption for mobile has been growing rapidly in Europe, but the US has always relied on other options for the customer. Cash, credit, and debit card transactions still dominate the marketplace, as they have for decades.
“As more small businesses owners bring their businesses on the move with them, the need for mobile options increases. We expect that this trend will continue to drive mobile payment adoption to similar levels as seen in Europe.”
As Margarites rightly pointed out, not only has Apple’s payment method been beneficial to customers, its sister app, Apple Tap to Pay, has become one of the most used merchant payment acceptance services, providing a whole host of benefits.
Whether it be to accelerate the point-to-sale experience, or its secure biometric security function, companies of all shapes and sizes in the US have begun to realise this.
“This technology allows businesses to accept payments using just their iPhone, whether in their storefront or on the go.”
Over 90% of US retailers now use and accept Apple Pay via Tap to Pay, a testament to how the payment method has engulfed the retail and commerce sectors in the country.
For Margarites, TD’s offering of Tap to Pay has enabled its smaller businesses an ease of use function that is not only adaptable to consumer demands, but also solves the issues of accepting these demands.
He explained: “When asked to select current challenges faced in day-to-day operations and inability to accept payments, one-third (33%) of respondents to our small and micro business survey noted not having the necessary payment acceptance device or hardware to accept customers’ preferred payment method as a challenge.
“Whether that’s a food truck owner who doesn’t want to spend the money on a point of sale so they only accept cash, a local storefront that’s trying to accept payments while taking a customer’s questions, or a travelling salesman who would like to accept payments on the move.
“Tap to Pay on iPhone allows TD Bank customers to collect payments immediately and without added expense beyond the normal cost of a credit or debit transaction.”
But for as seamless as Apple Pay can be, why are so many small businesses still struggling to adopt and integrate these digital payment methods into their core infrastructures?
Firstly, there is a continued reliance on cash and cheques in the US, something that is slowly becoming obsolete in Europe and other emerging markets.
Cheques in particular are a peculiar payment method. They are often the most cheap method for merchants as they do not require the same interchange transaction fees associated with credit and debit card payments.
However, cheques are notorious for their lengthy process to be cleared and sent and according to Margarites and TD Bank, small businesses are now hungrier than ever for quick and reliable acceptance.
According to the US subsidiary bank’s own research, its survey found that 29% of its small and micro-sized businesses wanted fast access to their funds, as it was a main driver for their payments decisions, which Margarites cites as a key reason for the introduction of Tap to Pay.
“We also found that more micro businesses that we surveyed found that digital payment methods are even more popular than credit and debit cards with their customers. Payment acceptance barriers could be a reason for that, as can their ability to be mobile in nature,” added Margarites.
“Those barriers are one example why we’ve created the Tap to Pay on iPhone solution. This technology allows businesses to accept payments using just their iPhone, whether in their storefront or on the go.”
It may be due to the powerhouse brand that Apple has curated over the past two decades, but now with a large majority of merchants accepting and integrating Apple Pay into its infrastructure, it’s not just the payment acceptance phase that is bolstering small businesses adopting the method.
The fact that Tap to Pay can be installed at in-store retail stores, pop-up shops, online e-commerce sites and so on, is why it has become a rapidly growing and accepted merchant service.
Add in the seismic Apple user base and small businesses can now attract a large segment of customers just by adding a payment method that is being used by a large majority of Apple’s user base in the US.
But what’s next?
Merchants will no doubt want payments to be accelerated even further to help drive sales and acquire new customers. Whilst the US are still embedding the digital wallets and new payment solutions that have been born in Europe, there is an emerging technology that is looking to shape not just the payments industry but every industry on the planet.
“Both sides of the pond are working on how AI is going to change all industries. I think there’s a lot of learning to do with this relatively new and dynamic technology,” said Margarites, who revealed he is anticipating the inevitable takeover of AI.
It is no secret that Apple is making extensive use of AI technology, adding ChatGPT features in the upcoming iOS 18 update.
Who knows, maybe the next evolution of Apple Pay wil see automated payments facilitated by Apple’s own AI model that can send and receive payments in just speech alone.
Whilst AI remains a heavily divisive topic, if it can help merchants streamline their payments to further heights. There is no doubt that US banks like TD Bank will look to optimise this for their smaller business customers in the coming years.
