Several news outlets reacted to a report that the number of Apple Pay users is now greater than the standard bearer for mobile payments: Starbucks. One such article can be found posted on MacRumors. Apple Pay beating out Starbucks is interesting and is an indicator of how mobile payments are evolving, but does it really matter so much?
From the article:
In 2019, Apple Pay will have 30.3 million users, or 47.3 percent of mobile payment users. That compares with Starbucks’ 25.2 million customers via its mobile app in the same year, representing 39.4 percent of mobile payment users.
Nearly 64 million people (30 percent of all U.S. smartphone users) are expected to make use of mobile payments this year, a 9.1 percent increase over 2018. In terms of demographics, nearly 50 percent of all smartphone users are adults aged 25 to 34, so the growth of mobile payments is expected to be strongest in this age group, although digital wallet use is said to be growing across the board.
While the growth is worth understanding, is it really newsworthy that a universal mobile app that can be used at any NFC enabled merchant now has more users after five years of existence than the Starbucks mobile app that can be used at one merchant?
Also from the article:
Citing data from Digital Trends, the analysis predicts Apple Pay will be available in 70 percent of U.S. retailers by the end of 2019.
Apple Pay and all other contactless forms of payment have been predicted by the global networks to be available in 70% of merchants as retailers activate their contactless terminal capabilities to capture contactless card transactions. Issuers have begun in earnest this year to replace debit and credit cards with dual, contact and contactless capabilities.
One item that wasn’t covered in the article: how much are banks paying Apple for each transaction? Most contracts between issuers and Apple require issuers to pay Apple 15 basis points per transaction. If all 30.3 million Apple Pay users spend $1,545 per year, the average mobile spend quoted in the article, that’s over $70 million annually.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group