Apple Pay 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 Apple Pay customers. Introduced by Apple in September 2014, linked to the iPhone 6, Apple Pay 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 tokenisation, 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 Apple Pay. 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 Apple Pay 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 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 Apple Pay adoption tracker, a quarterly demand-side survey of US iPhone 6 and 6s users asking them whether they have used Apple Pay. They then make projections of overall market adoption based on the size and share of the iPhone 6 base. The most recent (March 2016) Apple Pay tracker showed that more people were indeed trying Apple Pay 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 Apple Pay has also launched in the UK, Canada, Australia and, in 2016, 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 Apple Pay during the recent second-quarter Apple earnings call. The numbers he actually shared: Apple Pay is adding a million users a week, and transaction volume is up 5 times compared to 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 its importance relative to other instruments). Apple Pay 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 smartphone-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 standardised 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 others (such as Apple, for that matter). It is very likely that reporting standardised numbers will become more common for Apple Pay 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
Co-Founder of Digital Frontiers
Founder and CEO of Integral: Governance Solutions

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