Apple Pay Beats eBay and Google in In-Store Mobile Payments
Microsoft Joins the Mobile Payments Platform Bandwagon (Part 2 of 5)
Apple beats Paypal and Google
In the last part of this series, we discussed Microsoft’s plans to enter into the mobile payments space. eBay is an established player in this market while Apple and Google are newer players. However, according to a Jefferies report published in early April 2015, Apple (AAPL) Pay beat eBay’s (EBAY) PayPal and Google (GOOG) in in-store mobile payments. PayPal’s strong relationship with retailers places it as a significant player in this space.
According to BRP (Boston Retail Partners), 38% and 56% of large retailers are expected to support Apple Pay by the end of 2015 and 2017, respectively. As a result, it’s the most extensively used mobile payments platform among the large retailers.
Apple Pay will likely to push NFC adoption
Apple Pay was launched in September 2014—along with Apple’s iPhone 6 launch. It uses NFC (near-field communications)—a short-range wireless technology for sending data to payment readers. NFC technology is used in Google (GOOG) Android and Microsoft (MSFT) Windows-based smartphones.
The above chart shows the results from a Berg Insight report. The report stated that NFC handset shipments are expected to grow from 140 million in 2012 to as much as 1 billion by 2017—growing at a CAGR (compound annual growth rate) of 48%.
According to Reinhardt Krause, an Investor’s Business Daily writer, “Analysts say that just 15% to 20% of U.S. retail locations have NFC-equipped sales terminals, but Apple’s push into mobile payments could speed NFC adoption.”
A survey by RBC Capital Markets, an investment bank, said that “Apple’s new mobile wallet for iPhone users will grab between 10% and 20% of payments by 2019”.
To gain diversified exposure to Apple, you can invest in the iShares US Technology ETF (IYW). It invests about 20.65% of its holdings in Apple.
Apple Pay’s limited usage is a concern
According to Baird Equity Research, Apple Pay has been tried by ~40% of iPhone 6 users. Although, Apple stated that interest in Apple Pay is growing exponentially, its consumption is still restricted. According to Jason Kupferberg, an analyst with Jefferies, “Apple Pay has been the most successful multi-merchant mobile wallet to date, but usage is still quite limited.” To expand its reach, Apple partnered with payment networks Visa (V), MasterCard (MA), and American Express (AXP) as well as new stores and banks.
Although, Apple Pay hasn’t gained momentum yet, various estimates point towards the system’s increased adoption in the future.
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