Apple Pay international expansion represents an important step in Apple’s effort to transform its mobile wallet into a global payment platform. Following its initial launch in the United States, Apple announced plans to bring Apple Pay to Canada and Australia, followed by additional markets including Hong Kong, Singapore, and Spain. A partnership with American Express provided Apple with a way to extend the service into several of these countries.
The markets selected for expansion also shared an important characteristic: relatively strong contactless payment infrastructure. Widespread availability of contactless-enabled terminals could remove one of the significant barriers Apple Pay encountered in the U.S. However, infrastructure alone does not guarantee adoption. Apple must also contend with different consumer payment habits, regulatory environments, interchange economics, financial institutions, and established local payment competitors in each market.
In an investor conference call, Apple CEO Tim Cook outlined the company’s fourth quarter earnings but also highlighted that Apple Pay will be expanding into further international markets later this year as well as in 2016. According to Tim Cook, Canada and Australia will see Apple Pay services go live in 2015 following a deal with American Express. In 2016, the company hopes to expand the service to Hong Kong, Singapore and Spain.
While the markets set for Apple Pay’s initial international expansion seem an eclectic bunch, they were chosen due to the fact that each already has a significant base of contactless enabled terminals which should help the payment service gain traction among the local consumer base. For example, Mercator Advisory Group estimates suggest that Spain alone might have more contactless enabled terminals than the United States.
Though the markets selected might have the foundation in place for Apple Pay to succeed, there is relatively little evidence that consumers in these countries will rush to adopt mobile payments as has been seen in Apple Pay’s home market, the United States. Consumer apathy, coupled with different regulations like interchange caps and local competitors all make international expansion daunting but Apple Pay has the resources and brand power to potentially become one of the first truly global mobile payment systems.
Apple Pay international expansion could help establish the service as one of the first truly global mobile payment platforms, but success will depend on more than Apple’s brand recognition and large customer base. Each new market presents different competitive, regulatory, and consumer adoption challenges that could influence how quickly mobile payments gain traction.
Strong contactless infrastructure gives Apple an important foundation in markets such as Canada, Australia, Hong Kong, Singapore, and Spain. If Apple can combine that infrastructure with broad issuer support and a compelling consumer experience, Apple Pay could significantly expand its global footprint and demonstrate whether its mobile payments model can succeed across diverse international markets.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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