Well, that was anticlimactic. But I knew it would be.

Between Starbucks mobile, Square Wallet, Google Wallet and my Discover Card contactless sticker affixed to the back, I’ve made a few hundred in-store purchases with my phone.

So smartphone purchase #247 today was hardly remarkable from a UX standpoint. The only thing that would have made my first Apple Pay experience interesting would have been if it failed (resulting in a much more clickable headline for this post). But although it took three tries (note 1), the phone finally vibrated (the same as my Nexus) telling me that Apple’s NFC magic had indeed triumphed (note 2) adding 1.05 cent to its Q4 numbers (note 3).   

And although I firmly believe we are at “peak plastic” for debit/credit cards and payment via the cloud is inevitable, I don’t see how Apple Pay adds 15 BPS (or a half-cent for debit) of value to the card-using experience. But to play with Apple you have to pay. And 15 BPS is a lot better than the 30% interchange Apple has collected for the past six years on in-app purchases. So I’m neither criticizing the rumored economics, nor the 500 issuers who have signed on. For competitive reasons, you might as well play along (or not, see previous post). 

Bottom line: I’m not giving up on plastic, or merchant-specific apps like Starbucks (or MCX?), quite yet. The iPhone/TouchID experience is great, but at this point, it’s slightly more cumbersome than plastic (note 4) and costs more if you account for my tendency to drop the phone (note 5). 

And Apple Pay’s consumer value for in-store purchases will come in the future with more integration between phone, bank and merchant (note 6). Getting customers to give up plastic is all about the three R’s: rewards, receipts, and relationships (note 7). Starbucks has nailed it (note 8). Apple has not, yet.

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Screenshots

My first Apple Pay in-person transaction
Left: Push notification on top of homescreen
Right: How it looks within the Apple Passbook app

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Notes:
1. The first time I put the phone next to a terminal, nothing happened when I authenticated with TouchID. I’m not sure if it was my phone’s failure or the cashier failed to ready the charge properly. The second time, it did connect, but I was declined with a negative “buzz” from the phone. The cashier readied the charge a third time and this one went through with a pleasant vibration and push notification on the screen. These things happen, even when swiping plastic, so I don’t hold it against Apple Pay. That said, were I a so-called normal consumer, I probably would have pulled out my plastic and waited for Apple Pay 2.0 next year before trying again. 

2. Sadly, I still had to make chicken scratches (aka my signature) on the Verifone display at Bartell Drug for the $6.99 box of tea and also have a paper receipt shoved into my hands. It’s not Apple’s fault, but it does detract from the overall UX. 

3. My $6.99 purchase times the rumored 0.15% interchange rebate to Apple. 

4. I’ve been using TouchID only a month, but so far, I find it clumsy. I have three fingerprints registered, and some work better than others, and overall, I find it can take numerous attempts to get it to authenticate. This is not something I want to experience at the front of the checkout queue. It’s bad enough that I’m standing there waving my new $600 gold smartphone at the terminal. I don’t need to be holding up the line while I fumble with said device. Once the novelty wears off, I’ll probably go back to swiping plastic, at least if there’s a queue. 

5. In addition, every time I pull my phone out, especially when juggling purchases at the point of sale, there is a chance I’ll drop it. And since I detest cases, I crack my screen every year or two. Assuming it costs $100 to fix, and I crack it once every 5 to 10,000 times I handle it, it’s cost me 1 or 2 cents to use my phone in lieu of plastic. 

6. This post is about the physical point of sale. The one-click mobile-payment process for Apple Pay-powered shopping carts and apps has immediate and understandable value for both the consumer and merchant. 

7. You could argue that the increased security from phone payments will move people off plastic. But consumers still do not trust mobile phone security, for good reason. And they know they are covered for plastic security breaches. So the known threat (plastic) probably trumps the unknown (phone) for the time being. 

8. And the Starbucks experience gets better next year when “order ahead” goes national.

If all goes well, some time within the next week Apple Pay will be up and running. Short-term it won’t cause a ripple in market share or consumer behavior (see previous post), but long-term it is likely to be seen as an important mobile-payments milestone.

Regardless, I look forward to using it. But with only a couple contactless terminals in my usual Seattle haunts, I guess I’ll be buying lots of coffee at Peet’s and Tully’s while I test it.

But I digress.

The subject for today is what banks are and aren’t doing to ride on Apple’s mobile coattails. There has been little FI marketing so far, other than PayPal’s NY Times full-pager poking fun at it (15 Sep 2014, see inset). And some media buys from Visa and MasterCard.

Eleven financial institutions were named on 9 Sep 2014 at the official launch of Apple Pay: Six major launch partners listed below and five “coming soon” issuers (see note 1).

The big six have been almost silent since the first week when four of the six issued press releases, emailed customers (note 2) and/or posted promos on their websites.

Issuers may now be gearing up their marketing machines, which were caught relatively unaware last month, due to Apple-prescribed secrecy, for a pre-holiday Apple Pay push. However, I would not be surprised if major issuers, who’ve already seen contactless card-usage fizzle, take a wait-and-see approach for the remainder of 2014.

In any event, it will be interesting to watch. 

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Apple Pay FI launch partner marketing to date
_________________________________

American Express 
   Press release: No
   Email: None reported
   Website promotion: None reported
   Website site search: Nothing listed

Bank of America
   Press release: No
   Email: One reported by The Financial Brand (link) though I did not receive it    
   Website promotion: Nothing now, but promo reported at launch by Jim Marous in The Financial Brand
   Website site search: Links to landing page (link)

Capital One
   Press release: link
   Email: One sent to my consumer account (12 Sep 2014)
   Website promotion: None reported
   Website site search: Nothing

Chase
   Press release: Quoted in Apple’s official release (link)
   Email: One reported by MediaLogic (link) though I did not receive it    
   Website promotion: Nothing now, but promo reported at launch by The Financial Brand
   Website site search: Nothing

Citibank
   Press release: link
   Email: None reported
   Website promotion: Nothing now, but promo reported at launch by The Financial Brand
   Website site search: Nothing

Wells Fargo
   Press release: link
   Email: Two sent to my consumer account (11 Sep and 19 Sep 2014)
   Website promotion: Nothing now, but promo reported at launch by The Financial Brand

   Website site search: Nothing

______________________________

Second wave issuers
______________________________

Perhaps because they are smaller and must try harder, three of the six next-wave Apple Pay issuers (note 1) have promos running on their websites today:

Barclaycard homepage (one of three promos in rotation)

PNC Bank homepage (in lower left corner)

US Bank homepage (one of three promos in rotation)

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Notes:
1. The five other issuers mentioned at the Apple launch were: Barclays, Navy Federal Credit Union, PNC, US Bank, USAA. Yesterday, Arvest Bank announced it was supporting the system as well.
2. Despite having 10 card accounts (four business and six personal) across the six launch partners, I have received emails only from two (Wells Fargo on 11 & 19 Sep 2014 and Capital One on 12 Sep 2014).