Apple Pay goes cha-ching

Two new reports suggest that Apple’s investment in its proprietary payment system is paying off, big time.

From Quartz: “Apple Pay is on pace to account for 10% of all global card transactions

Apple Pay accounts for about 5% of global card transactions and is on pace to handle 1-in-10 such payments by 2025, according to recent trend data compiled by Bernstein, a research firm. “There are indeed plenty of reasons to worry that Apple may attempt to disrupt the payments ecosystem,” Bernstein analysts, led by Harshita Rawat, wrote in a research note…

The digital payments race is an immense opportunity, representing about $1 trillion in revenue around world. Visa and MasterCard process more than $14 trillion of payments each year and are still growing as more transactions go online, flow through apps, and as consumers in many parts of the world use cash less often…

There’s no shortage of slick, feature-rich payment apps out there, but Apple Pay has several advantages. The app is pre-installed on iPhones, and Apple has tight control over the device’s NFC technology that’s used for contactless payments. That’s why Apple Pay is the only iPhone mobile wallet that can make NFC transactions. (Alipay and WeChat Pay, the enormously popular Chinese payment apps, use QR-codes. The optical codes are read through a phone’s camera and aren’t controlled by Apple.)

From Jupiter Research: Apple Pay Still Leading OEM Pay Battle

The research found that Apple Pay will account for a 52% share of OEM Pay transaction values, up from 43% in 2020. The expansion of Apple Pay’s user base in key regions, including Far East & China and Europe, will drive growth, as well as the extension of Apple’s reach outside OEM Pay through its Apple Card initiative.

Research author Susannah Hampton explained: “Apple is now leading the space, owing to its unified ecosystem. Competitors, including Google and Samsung, must continue to expand the reach of their services in order to make strides in the market”.

My take: Has it really been seven years since Apple put a flaky fingerprint reader on the iPhone 5S? I remember wondering at the time what the hell Apple was up to. Now I know.

17 Comments

  1. Jerry Doyle said:

    Apple appears at this period not to be challenging the card giants, but proceeding forth with its head down, sticking to its needle work until such time (I believe) Apple feels poised to strike. Apple will need its own network separate from the card giants to ramp up exponentially revenues in this service industry sector of its operations. Apple has as much trust among many consumers (if not more) then the giant card companies do.

    The financial services industry is humongous, and I am excited with anticipation as to how and where Apple will venture in this industry.

    Apple also is poised to provide incentives through its card system (in fact through its own independent network) to drive hardware sales to new heights. Zero percent financing of hardware will drive sales not just of iPhones, but Macs and Wearables. Each sale feeds off the other leaving the Apple investor asking a similar revenue metaphor such as which came first, the chicken or the egg.

    7
    February 12, 2020
  2. Fred Stein said:

    Thanks, Jerry, I up-voted, you.

    Apple will do so much more on its payments platform. It’s just like the iPhone and the carriers, where Apple delivers and earns more value on their “rails”. Also, like the iPhone, Apple’s payment services will attract an ecosystem of third parties.

    While Apple Cash is late to P2P, consumers will come around. Next Apple can enter the remittances market, even global eventually.

    It’s likely Apple will announce a new financial service every year.

    Apple may help reduce the current conversion costs for many travelers.

    Plus, the IB of Apple Pay etc. grows faster than the the IB of iPhone. Plus the middle class is growing in China and now India, where has finally gotten traction with the government.

    2
    February 12, 2020
  3. Fred Stein said:

    Doubling down on the P2P bit.

    Venmo has be at this for over a decade. One of their key growth drivers is the social aspect. That’s why Venmo ‘own’ the millennial demographic, who don’t see the privacy risk. See more here: https://www.npr.org/2019/02/25/697090168/as-payments-go-social-with-venmo-theyre-changing-personal-relationships

    Apple goes all-in on privacy. Millennials will come around, over time. My nieces are now dropping WhatsApp and also defaulting to DuckDuckGo.

    2
    February 12, 2020
  4. Gregg Thurman said:

    I’ve said it before: Apple is going to acquire a card card company. In five years through organic growth and the acquisition of MasterCard, or Discover, Apple Pay will become one of (if not the largest) the big three.

    If you want to see growth just watch what happens when Apple issues a debit card.

    2
    February 12, 2020
  5. John Blackburn said:

    The just-added ability to export financial statements, first to CSV and now to OFX, shows promising progress and evolution, enough that I’ll resume using the Card my default.

    Next on the wish-list: joint cards.

    0
    February 12, 2020
    • Gregg Thurman said:

      Rome wasn’t built in a day. I believe that Apple has plans for Apple Pay that we’ve never considered.

      2
      February 12, 2020
  6. Bruce Oran said:

    I just want to say, “who were the clowns a few years back that were calling for Tim Cook’s head and insisting he was just an ops guy with no vision? You don’t hear from them any more! They are probably unemployed!! With all due respect, I do not believe Steve Job’s personality would have ever allowed him to achieve what Tim Cook has for Apple! But then again, Jobs had the vision and foresight to choose Cook. He saw in him what others might have not!

    5
    February 12, 2020
  7. Steven Noyes said:

    Okay, I’ll say it. I question the 5% number. Unless it means mobile card usage but 5% of the global card transactions??????

    Not a chance. My roommate uses Apple Pay to send rent. He is the only person I know which uses it and he only uses it for rent.

    1
    February 12, 2020
    • Gregg Thurman said:

      I think the article is referring to mobile payments using a cellphone or smartwatch.

      From the article: Apple Pay probably won’t pose a challenge to the card giants anytime soon.

      And then there is this (supporting my belief that Apple will buy MasterCard): While the tech company could, in theory, create its own network that runs outside the card systems, Bernstein argues that Apple still needs the card networks, which are ubiquitous and trusted

      1
      February 12, 2020
    • Aaron Belich said:

      I use it daily, plus all direct from Apple transactions for services purchases. 60+ transactions a month. That’s 60+ transactions/mo that Visa no longer sees via another card.

      1
      February 12, 2020
      • Steven Noyes said:

        But given there are nearly 400,000,000,000 card transaction Globally every year, does Apple really get 20,000,000,000 contactless transactions every year?

        I think the number is really high.

        0
        February 12, 2020
  8. Aaron Belich said:

    Also, why is the Bernstein comment coming from Harshita Rawat and not our beloved favorite Toni Sacconaghi? Finance vs “tech”?

    0
    February 12, 2020
  9. John Butt said:

    Apple Pay is almost invisible outside the USA.

    0
    February 12, 2020
  10. Robert Martin said:

    I used Apple Pay constantly last summer for three months in Slovenia, Germany and Denmark. Rarely used cash or credit cards.

    0
    February 12, 2020
  11. Kirk DeBernardi said:

    The first time you complete a payment with your  WATCH (provided you’re doing business with a company/store that’s hip to the necessary hardware and software) you instantly wonder why you would ever desire to pay with ANY other method.

    Double press. Raise your wrist…

    Bada-bing.

    How could this not have a glorious future?

    0
    February 13, 2020
  12. Manfred Schwencke said:

    Usage of Apple Pay in Europe is increasing strongly! Most countries covered by now in Europe,
    Germany was late due to strong market position of Sparkassen (regional Saving Banks). Now, all major Banks accept Apple Pay and are investing heavily in Marketing!
    Virtually all POS do have NFC, so no technical boundaries.
    I do all my payments with Apple Pay now (100 transactions per month). I know many people who do the same!
    All in all, great potential for Apple for growth and to become strong market player in payment business.
    Few analysts recognize / value that!
    Very promising Service Offering!!

    0
    February 13, 2020

Leave a Reply