Digital Transactions Authoritative, insightful and timely information for payments professionals
Apple Inc. is notoriously tightlipped about how its Apple Pay mobile-payments service is doing, and the occasion of the computing giant’s quarterly earnings call late Tuesday was no exception. Still, while Apple chief executive Tim Cook said little to satisfy widespread curiosity about the wallet’s adoption and usage among consumers, he did indicate the service is growing steadily both in the United States, its original market, and overseas.
But he also conceded Apple Pay remains a minor arrow in Apple’s formidable quiver. Referring to the wallet’s user community and the revenue Apple derives from the service, he noted, “The growth is astronomical, but the base is very small.”
With Apple Pay’s expansion last month into France, Switzerland, and Hong Kong, the service has now gone live in nine markets globally since its U.S. launch in October 2014. The user base is now in the “tens of millions,” Cook said, with an “estimated” growth rate in active monthly users of more than 450% as of last month compared to June 2015.
More than half of Apple Pay’s transactions now come from non-U.S. markets, Cook said, adding, “Adoption outside the U.S. has been explosive.”
Cook added that more than 11 million locations accept Apple Pay, including 3 million in the U.S. He didn’t offer any further detail, but the U.S. number likely includes all or most of the estimated 1.3 million merchant locations now capable of running EMV transactions, plus hundreds of thousands of vending machines harnessed with contactless capability. Most if not all EMV terminals come equipped with the near-field communication technology required to run Apple Pay’s tap-and-pay transactions.
Citing “leading financial partners,” Cook said Apple Pay in the U.S. now accounts for 75% of all contactless transactions, a number he called “amazing.” Apple has worked with U.S financial institutions, including many of the country’s largest banks, to include their cards in Apple Pay and tokenize cardholders’ credentials.
Apple Pay since its launch has worked in stores and with merchants’ mobile apps. This fall, the company is adding browser capability so consumers using Safari will be able to make purchases with the wallet.
Cook also struck an optimistic tone with respect to Apple’s iconic iPhone, the smart phone on which Apple Pay crucially depends. But here the news was mixed at best. For the quarter ended in June, Apple reported sales of 40.4 million iPhones, down 21% from the previous period and 15% from the same period in 2015. A new version of the iPhone is expected in the fall.
Apple’s total revenue for the quarter came to $42.4 billion, a 16% drop from the previous period and a 15% decline from the same quarter last year. Revenue for Apple Pay, which the company does not break out, is wrapped up with other “services,” such as the App Store and Apple Care. Services revenue for the quarter totaled $6 billion, no change from the previous quarter and up 19% from the same period last year.
