Apple Pay holds the capability to move from being a non-significant revenue contributor to a significant part of Apple’s product line-up
Apple Pay has been received well by the market, but it has yet to grip the market; therefore, it may not be a significant contributor to the company’s revenue as of now. According to Colin Gillis, an analyst at BGC Partners, “Apple Pay is not likely to be a material revenue stream on its own anytime soon.”
Popular, but not revenue-wise
Gillis said the company receives just 15 cents for every $100 in Apple Pay transactions. Based on this calculation, if the company wants the payment service to add just 1% to total sales, then the users will have to make transactions worth $451 billion, which is a huge task.
Retailers such as McDonalds, Whole Foods and Staples have already added Apple Pay as a payment option. Additionally, every major credit card company has teamed up with Apple Pay. Further, Apple Pay will be a significant app in the upcoming Apple Watch. Apple’s payment platform is a simple and easy-to-use app. Also, from a safety point of view, it is better than a credit card.
However, despite the popularity and simplicity, Apple Pay makes only 0.15% per transaction, which is not so significant to Apple’s revenue and bottom line. Even though financially the payment technology is not a significant revenue stream as of now, it is important to Apple for various reasons, says a report from CNN by David Goldman.
Relevance of Apple Pay
Apple Pay helps to add and retain users for the obvious reason that service is exclusively on Apple’s iPhones. Apple Pay is the most popular payment technology launched this year, and users are finding that it’s easy to use the simple and attractive option of Apple Pay.
Another reason for the significance is that Apple Pay has become hugely popular and is standing parallel to brands such as Visa, MasterCard and American Express on credit card terminals at retailers around the World.
As of now, Apple Pay is merely contributing very little, but that could change anytime as Apple Pay gains more ground and the company then starts charging more fees per transaction. The service from Apple holds huge potential,as according to Forrester Research, the mobile payments market at physical stores is expected to be worth $142 billion by 2019.