Like all mobile wallets before it, Apple Pay struggles with retailers

47 percent of Apple Pay users were denied by a participating merchant, study says.


One piece to the puzzle that might keep banks paying into Apple’s platform is that customers seem to use credit cards more often on Apple Pay. According to Phoenix, 82 percent of Apple Pay users linked a credit card to their accounts, and 53 percent linked a debit card. “Among those that linked both a credit and a debit card to Apple Pay, 67 percent reported that the credit card was the first-card—thus becoming the default card.” Phoenix wrote. “56 percent rarely or never change the default when making a purchase.”

That behavior is interesting on a number of levels, not least because when a credit card is used, banks get higher interchange fees and consumers are better protected from fraud by federal credit card regulations. The only party losing out is the retailers. (Well, until they pass the costs back on to the customer). “Banks always prefer cardholders utilize credit for the higher interchange the banks receive,” Sloane wrote to Ars. “Consumers often pick credit over debit for higher risk transactions since credit has greater protections under [Regulation] Z. Mercator consumer data indicates that many smartphone owners are not confident that the smartphone is safe for payments, which may incline them to enable credit cards before debit cards (or maybe it’s for the rewards!).”

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