Apple Pay: Endgame

Five years since it turned your iPhone into a wallet, Apple now dominates the mobile payments space in the U.S. and has created a foundation of digital trust that will enable it to explore future opportunities beyond hardware.

Money, money, money

Apple Pay was first introduced in the U.S. five years ago on October 20, 2014 (I’ve embedded its launch video below).

It is fair to say the U.S. market wasn’t really primed for mobile payment services, which were already in use in some form in Europe and APAC. Adoption reflected this. As of January 2019, just 12% of Apple Pay users were based in the U.S., with 88% elsewhere, a report from Co-Op Financial Services claimed.

Apple has kept up the pressure, working to enhance Apple Pay availability and to evangelize use of mobile devices for tasks related to personal identity. Using Apple Watch as an ID on campus helps enhance perception of these devices in more vital roles.

Apple has been parlaying its high degree of user satisfaction and status as a trusted tech brand to help promote its mobile service.

Wake up and smell the coffee

It seems to be working.

eMarketer reports that 30% of U.S. smartphone users will use a mobile payments app, with 30.3 million Americans now choosing to use Apple Pay. 24% of U.S. iPhone users have used Apple Pay, compared to 47% of international users.

These numbers suggest that U.S. consumers (like consumers everywhere else) have become more accustomed to using mobile payment systems. It also hints that they are choosing to use Apple Pay at a faster rate than other payment systems.

Starbucks had been the leading mobile payment service in the U.S., but it has now been surpassed by Apple Pay, according to eMarketer.

That’s interesting, because while Starbucks only lets you buy stuff at Starbucks (and rewards you when you do), Apple Pay lets you purchase products almost anywhere.

This reflects a second trend: Consumers are more willing to use mobile payment systems in more places. 

Juniper Networks predicted that digital wallet spending in Europe and the U.S. would increase by 40% this year, to around $790 billion.

Get yourself connected

There are almost a billion iPhone users in the world, and 43% of them have enabled Apple Pay, a Loup Ventures report claimed.

The profits in mobile payments are relatively small – hundredths of a percent on each exchange. That’s why mass adoption of these systems is important, and this is what Apple Pay appears to be generating.

Total U.S. mobile payment spending will approach $100 billion this year, which means users are spending 24% more than last year.

This delivers per person spend around $1,545 per year, which while generating little cash on a per user basis equates to significant revenue overall.

Digital Trends claims Apple Pay willl be supported by 70% of U.S. retailers by the end of 2019. Jennifer Bailey, Apple’s VP Internet Services, made a similar prediction this year.

Apple Pay: Endgame

A recent PYMNTS study suggests that most people use Apple Pay alongside other card-based services.

eMarketer also sees this trend: “Although a growing number of Millennials feel secure using payment apps, virtually all still find credit and debit cards equally convenient,” said eMarketer junior forecasting analyst Vincent Yip.

In other words, consumers want to diversify payment services providers. They use cards where doing so makes sense and mobile when convenient. This may also reflect that some nations place a limit on the maximum spending you can make with mobile.

What’s the appropriate response?

To give them an Apple Pay card, of course.

While setting a challenge for the industry, Apple’s decision to launch Apple Card both sidesteps mobile payment terminal availability and acts as a gateway to wider use of Apple Pay.

Added to that, the fact that Apple just leapfrogged the most successful mobile payment system in U.S. history will one day be seen as a sign that mobile payments have become mainstream.

Why does that matter?

Oddly enough, it’s no longer really about payments, but more about building consumer trust in mobile services (and value in digital products) across every part of life.

That trust means we already consume media, play games, and pay for stuff using mobile.

Apple (and others) can now find new services and business models that can be built on that trust. 

It’s really only limited by what you imagine you need.

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