ApplePay’s 500% Growth

Most have seen Apple’s earning’s transcript, with following key ApplePay Excerpts:

  • ApplePay users tripled
  • Transaction volume up 500% YoY as Apple expanded to four new countries. It’s now available in 13 markets.
  • 2 million small businesses are now accepting invoice payments via Apple Pay on the Web, and that the “Services” segment to which Apple Pay belongs saw revenue hit $7.17 billion,” up 18 percent year-over-year. category also includes major drivers like Apple Music and the iOS App Store.

This is good news for mobile, payments, apple and Visa/MA.. but the growth is 90% in new market penetration, not increased use in US. The ability for 2M SMBs to accept invoice payments does not connote use..

Specifically, the US banks I’ve talked to have not see a bump in ApplePay volume, my best guess is $800M GDV in US (see last month’s blog Apple Pay Math).

I do expect ApplePay volume in US to take off in US in 3Q/4Q, moving from $800M GDV to $1.5B (run rate). The drivers of this growth in next 2 years will be:

#1 – Contactless POS adoption with Major Merchants

#2 – Increased use of in-app payments

#3 – Beginning of the ApplePay in Browser. (Estimate 2017 AP in Browser to be $80-$150M in US)

In summary, Paypal has nothing to sweat in 2017.. Assuming Apple’s 15bps is uniform across networks/countries, ApplePay’s total 2017 GDV (globally) should land around $4B-6B this means Apple’s revenue (from issuers) would be $6M -$9M..  hardly worth mentioning in the income statement.

 

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