ApplePay Math

I’m super excited about ApplePay in browser (my last blog)… and how it works with the touch ID in the new Macbook. Online merchants have only a few days of effort (see Stripe) to integrate into online checkout flows. ApplePay eCommerce will blast past POS volume in 18 month (from today).

First let me give you my 90% confidence ApplePay GDV (Gross Dollar Volume). There are roughly 90M US iphone uses, with 12% ApplePay (wallet) registration = 10M registered cards.

  • $600M – 10% are active transactors with average of 15 transactions a month average of $40/transaction.
  • $200M – The other 90%

$800M/yr US ApplePay GDV (90% confidence).

Apple’s revenue? Given a 15bps fee = $1,200,000 /yr or $100,000 a month. Certainly Apple is NOT making money on ApplePay.

Browser Projections

Safari is 26% market share, that over indexes by 2-3x for affluent thus representing nearly 50% of $350M US eCommerce spend. Apple Pay eCommerce adoption is dependent on browser, device (touch ID) and merchant acceptance.  While the UI/Apple side of this is straight forward, the core challenge this week is with eCommerce gateway/processors handling the token/crypto in the existing authorization flow. Thus I see a 6 month delay before a massive “burst” of adoption.

My 30% confidence model

Why will merchants turn on ApplePay in browser?

  1. Improved consumer conversions of the best most affluent customer base
  2. Improved customer experience
  3. no cost
  4. Opportunity for reduced cost (see 3Ds 2.0)
  5. Opportunity for 100% of risk shifting to Bank

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