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ApplePay is adding a million customers a week—is this high or low?

One of the better kept secrets of the payment world at present is the real number of active ApplePay customers. Introduced by Apple in September 2014 linked to the iPhone6, ApplePay represented a leap forward in mobile payments using smartphones because of its customer convenience (through its NFC interface to POS) and enhanced security (including iTouch, a biometric reader for authentication as well as tokenization which protected the account holder details both from Apple and from the merchant). For these reasons, there was much excitement following its launch, and issuing banks were even willing to pay a part of their margin on each card-related transaction to ApplePay. The launch of ApplePay was followed soon after by similar schemes for different mobile operating systems, AndroidPay and SamsungPay.

Apple has so far seen no reason to release the exact numbers of ApplePay users, or indeed much other data around the service, regarding it as a commercial secret in these relatively early days at least when so much relies on the appearance of momentum and traction to tip in banks to sign up for the scheme. As a result, a cottage industry has developed among commentators seeking to guess the adoption numbers using other data sources. For example, the US payments website PYMNTS.COM has run an ApplePay adoption tracker, a quarterly demand side survey of US iPhone 6 and 6s users asking them whether they have used ApplePay. They then make projections of overall market adoption based on the size and share of the iPhone 6 base. The most recent (March 2016) Applepay tracker showed that more people were indeed trying ApplePay but that it didn’t stick—repeat usage was falling, mainly because consumers forgot to use it in the presence of long established card options which seemed more than good enough. Certainly, more and more issuing banks have signed up for the party in the US, and ApplePay has also launched in UK, Canada, Australia and in 2016 in China, Singapore, Hong Kong and Spain.

In this relative informational vacuum, there was much interest this week when Apple CEO Tim Cook shared more numbers about ApplePay during the recent second quarter Apple earnings call. The numbers he actually shared: ApplePay is adding a million users a week, and transaction volume is up 5 times on a year ago. But as PYMNTS.com points out, no one knows for sure whether this is because more people are coming into the system or if there is indeed a core of dedicated users, or what the absolute transaction volume actually is (and therefore importance relative to other instruments). ApplePay is not yet contributing to Apple’s earnings, which must hurt a bit, since iPhone sales are no longer growing.

It is interesting to compare these relatively early days in smart phone-based mobile payments in developed countries with the previous generation in developing countries, like Kenya. There was also much conjecture around early numbers reported by Safaricom, although relatively soon, providers did report and track the number of users. The next stage was to track the number of active users, since the registered number often proved completely meaningless, and across more countries. This required standardized definitions and reporting frameworks to collect the data. The GSMA’s MobileMoney Deployment tracker, largely funded by its donors, deserves a shout out for leading this process for developing countries to the point where their annual State of the Industry Report has become a reliable source of data, at least for MNO services where GSMA has more pull than on others (such as Apple, for that matter). It is very likely that reporting standardized numbers will become more common for ApplePay and others as the international market matures; but meanwhile, I for one am grateful for the various initiatives which have brought better data and hence understanding to mobile payments in emerging markets at an early stage of their development. And I hope that developed countries will soon follow…

 

By David Porteous

David Porteous
David has been involved in finance inclusion initiatives internationally for more than two decades. He received his bachelor’s degree in Accounting from the University of Cape Town, and later obtained an M.Phil in economics from Cambridge and a PhD (Economics) from Yale. David has held executive roles in public and private financial institutions in Africa, and is the founder and CEO of BFA, a consulting firm based in Boston.

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