Apple Pay Already Accepted at a Third of US Retail Outlets
- By Sangara Narayanan
The reach of Apple Pay has steadily expanded since the service was launched in October 2014. In two short years Apple (AAPL) has expanded the service to 13 countries, with four of them added last year - Japan, Russia, New Zealand and Spain.
During the first quarter 2017 earnings call, Apple CEO Tim Cook noted that Apple Pay's volume was up over 500% compared to last year even as the total number of users tripled during the period. Apple Pay experienced the same level growth in the fourth quarter of 2016 as well, which means the current trend has enough momentum to continue for some more time.
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"Apple Pay transactions were up nearly 500% year-on-year for the September quarter. In fact, we completed more transactions in the month of September than we did across all of fiscal 2015." - Tim Cook, CEO Apple fourth-quarter 2016 earnings call
According to a recent survey conducted by Boston Retail Partners, Apple Pay is now accepted by 36% of the retailers in the U.S., with another 22% expected to start accepting Apple Pay in the next 12 months.
This is a massive boost for Apple Pay's prospects. Even at the current 36% level, Apple Pay has already become the No. 1 mobile payments processor, closely followed by PayPal at 34%.
Android Pay is a full 10% behind Apple Pay, and the gulf between Apple Pay and Android Pay looks even wider when you factor in the segment positioning of Apple versus Android.
Apple device owners sit at the high end of the luxury segment. With higher disposable incomes, they naturally spend more than Android device owners. As retail adoption of mobile wallets increases, Apple Pay users will slowly keep pushing up transaction volumes as well as per-transaction value.
Although Apple has been slow to enter into the ecosystem race, the current success they're seeing with Apple Pay will incentivize the company to get a lot more aggressive on that front. With only 13 countries added to the list and still lot of room to cover in the U.S., things are definitely looking up for Apple Pay.
As Apple's services segment slowly gains momentum, it will play a huge role in balancing the iPhone-dependent revenue model that Apple currently has. Services revenues during the first quarter of 2017 were $7.2 billion, which pales in comparison to the $54.37 billion dollars Apple made from iPhone sales. But let's not forget that services grew 18% during the quarter compared to last year, while iPhone sales growth is not nearly as high or as sustainable.