Apple Pay and the ambition to turn the iPhone into an ‘e-wallet’

According to the Wall Street Journal (WSJ), patience is not a common virtue in Silicon Valley when technology companies often have to change rapidly, breaking limits to rise.

So when Apple Pay was introduced in 2014, everyone thought that this electronic payment segment of the company would die prematurely when the business results were not positive in the first few years. But with its influence and perseverance, Apple proved to the world once again they were right.

The rate of using Apple Pay on iPhone in 2016 was only 10%, by 2020 it has increased to 50% and now it is about 75%.

So what made this success?

Unlike the new product lines that often resonate right after Apple’s birth, the Apple Pay service at its inception did not attract the interest of users when the card service was still popular. The percentage of Americans accepting online payments at that time was only about 3%, while this number is now up to 90%.

According to the WSJ, it took Apple a long time for consumers to get used to Apple Pay and accept it. This is not an easy thing when Apple once canceled the HomePod just 3 years after the product’s launch, and also boldly abandoned the iPod even though this product resonated with the Apple home.

With the popularity of the iPhone, Apple initially built Apple Pay to perfect its product. The fees that Apple collects through the bank with Apple Pay account for less than 1% of total revenue, but they make the iPhone more complete in the eyes of users when it can become an electronic wallet.

However, with its growth, Apple can now expand its profits with Apple Pay when it has an extremely large customer base. Please note that services such as card payments account for 20% of Visa’s total direct transactions in the US. This number is up to 45% in big cities like New York and Apple Pay can completely dominate this segment.

According to a survey by Piper Sandler, Apple Pay is currently the most preferred online payment service among young Americans.

That’s why CEO Tim Cook once confidently stated that Apple Pay could “kill” the existence of cash in circulation.

iPhone cum…driver’s license

With revenue doubling in 2019, Apple Pay has really become one of the key development areas of the apple house. Also this year, Apple partnered with Goldman Sachs to develop Apple Cards, then develop a program to buy first and pay later in 2022.

The Covid-19 pandemic has caused more and more people to transact online, and Apple Pay is quickly becoming one of the areas that will make big profits for Apple. The situation has grown so much that European authorities have accused Apple of using its position to favor Apple Pay over other payment apps.

Apple’s development of software segment such as Apple Pay is understandable when the growth in revenue and profit from selling hardware such as the iPhone is decelerating. Consumers have less and less reason to upgrade their phones when later iPhone models do not have a superiority or create too much excitement compared to old use. Maybe it’s just a flashy brand image in some markets.

Back to the point, Apple not only wants to turn the iPhone into a digital wallet, but also wants to include a driver’s license or an insurance card. However, this journey will still be very long, even spending decades with huge amounts of capital.

Bain’s survey shows that today’s young people would rather leave their wallet at home than forget their phone and sooner or later, Apple will also become a big player in the e-wallet segment as well as turn their iPhone into a product. integrate as many functions as they want, no matter how long it takes.

According to the WSJ, the success story of Apple Pay could be very different in the next 8 years as online payments become more and more popular, and Apple can wait as it has abundant financial resources and a well-known brand position. .

*Source: WSJ