In the eight months since Apple Inc. AAPL Pay launched, Goldman Sachs said there was "solid merchant traction," but "slow consumer adoption." The analysts recommended that Apple ramp up a loyalty and rewards program to help encourage adoption and "change consumer behavior," especially to generate repeat use. At present, Goldman said, just 6 percent of iPhone 6 users have used Apple Pay multiple times, while just 15 percent of iPhone 6 users have tried the payments system at all.
However, Goldman said that Apple was "clearly having an early impact on the mobile payments industry," pointing to the company's aggressive campaign to add merchants. The company has secured deals with 67 national merchants and 61 apps, with the most recent deals at Best Buy Co Inc BBY and Home Depot Inc HD. The mobile payments system, however, has struggled in the small and mid-sized business segment.
Related Link: Is Apple Becoming A One-Trick Pony?
Apple has also done well to secure relationships with credit card issuers that account for 90 percent of all purchase volume in the U.S., according to the note. Recently, Apple Pay added support for Discover Financial Services DFS.
The mobile payments space is nascent, compared to what it can be, Goldman said, and Apple can expect competition to become more intense moving forward. To become a leader, Goldman's takeaway is clear: Apple needs to develop "significant and tangible incentives to change consumer behavior and encourage use."
Apple has been stuck in a trading range between $125 and $130 since reporting earnings at the end of April. As of Friday's closing price of $128.77, the stock has gained 16.7 percent year-to-date.
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