Just One in Four Apple Pay Transactions Come From the U.S.

Apple Inc.’s Apple Pay service continues to roll out in foreign countries, so much so that 75% of its transaction volume is coming from abroad, according to Apple’s chief financial officer.

Apple Pay, which uses near-field communication technology for contactless payments with the iPhone and Apple Watch wearable device, was live in 15 countries early in the spring and launched in Italy in May. Next up are the United Arab Emirates, Denmark, Finland, and Sweden, all of which are scheduled to get the mobile-payment service before year’s end, senior vice president and CFO Luca Maestri told analysts Tuesday.

“Apple Pay is by far the number-one NFC payments service on mobile devices, with nearly 90% of all transactions globally,” Maestri said on a conference call to review Apple’s results for the quarter ended July 1. “Momentum is strongest in international markets where the infrastructure for mobile payments has developed faster than in the U.S. In fact, three out of every four Apple Pay transactions happen outside the U.S.”

Indeed, many nations are far ahead of the U.S. in deploying point-of-sale terminals that can process contactless payment card transactions. The U.S. is closing the gap, however, as most of the new EMV chip card terminals deployed over the past two years also handle NFC transactions—but many merchants have yet to turn on that functionality.

While Maestri said “the reach, usage, and functionality of Apple Pay continued to grow” in Apple’s third quarter of fiscal 2017, in keeping with the Cupertino, Calif.-based company’s usual practice he didn’t give any figures. In May, chief executive Tim Cook said transaction volume was up 450% over the preceding 12 months. Maestri briefly mentioned Apple’s coming person-to-person payments service linked to Apple Pay and its Message app, but provided no new details.

Apple Pay is a small part of Apple’s Services segment, which posted a record $7.27 billion in revenues in the third quarter, up 22% from a year earlier. The Services unit also includes Apple’s warranty service and the App Store, which Maestri, citing a researcher’s report, said generates nearly twice the revenue of the rival Google Play marketplace. For all of its services, Apple’s recurring-revenue accounts now number 185 million, up almost 20 million in three months, according to Maestri.

The iPhone, Apple’s best-selling product, saw unit sales of 41 million in the quarter, a 2% year-over-year increase. Revenues from the iPhone grew 3% to $24.8 billion. Cook said Apple has sold more than 1.2 billion iPhones since the smart phone debuted a decade ago.

In all, Apple reported net income of $8.72 billion, up 12% from $7.8 billion in fiscal 2016’s third quarter. Sales hit $45.4 billion, an increase of 7% from last year’s $42.4 billion.