[Pay War] ③ 10 Years Since Launch, Apple Pay Dominates US Market... Installments Coming Soon

Apple Pay Announces Entry into Korea, 10 Years in the US
3 out of 4 iPhone Users Active
Installment System Also Coming Soon

[Asia Economy New York=Special Correspondent Joselgina] Apple’s contactless payment service ‘Apple Pay,’ which is expected to land in Korea soon, has already marked its 10th year since launch in its home market, the United States. Three out of four iPhone users are using Apple Pay, and it accounts for nearly half of the mobile wallet payment market, which can be described as a ‘pay war’ among major corporations. Although the amount of simple payments in the U.S. is still not large, Apple has secured an overwhelming market dominance among competitors. Apple, which declared it would "replace wallets with iPhones," is not stopping here. It will soon launch an installment system called ‘Apple Pay Later,’ which allows payments to be split without fees or interest.

[Image source=Apple homepage]

◆ 10th Year Since Launch: "Available at 90% of US Stores"

According to Loop Ventures on the 13th (local time), as of last year, 74% of iPhone users in the U.S., or three out of four, have activated Apple Pay on their phones. The activation rate of Apple Pay, which was only 10% in its third year of launch in 2016, rose to 20% in 2017, 50% in 2020, and now is close to 75%, which can be considered ‘widespread.’

The Wall Street Journal (WSJ) noted, "Not all accounts remain active just because Apple Pay is activated," but added, "It took longer than expected for the iPhone to become a wallet, but it is gradually achieving results." The number of Apple Pay users is estimated to be over 500 million worldwide, with more than 45 million in the U.S. alone.

In recent years, as the pay war among major companies such as Google, Samsung, and Walmart has heated up, the number of stores accepting Apple Pay has also increased significantly in a short period. Currently, 90% of retail stores across the U.S. accept Apple Pay as a payment method. At the time of Apple Pay’s launch in October 2014, this proportion was only 3%. In New York City, Apple Pay has been usable on buses and subways since 2019. WSJ reported, "The more places where Apple Pay can be used, the greater the value of the service."

On the 8th, after finishing a meal with friends at an Italian restaurant located in the basement of Rockefeller Center in Manhattan, New York, 30-year-old Brooke Lim naturally held out her iPhone after receiving the bill. She said, "These days, I don’t even ask if Apple Pay is accepted; I just show it," adding, "Five years ago, I always had to ask first." Brooke, who said her friends wearing Apple Watches use Apple Pay 99% of the time, shrugged her shoulders and said, "It’s really convenient, and I sometimes wonder why I have to bother carrying a wallet."

Apple Pay, armed with the powerful weapon called the ‘iPhone,’ is leading the pay war against other companies. According to a report released last year by the data platform PYMNTS, Apple Pay accounted for 48% of in-store mobile wallet transactions in the U.S. in the second quarter of last year. This is more than double that of Google Pay (17%), which ranked second. PayPal, which led with a 30% share in 2020, fell to third place, losing two-thirds of its share. PYMNTS evaluated, "Although still minimal compared to credit cards and cash, Apple Pay has established itself as a major player in the mobile wallet market."

Industry experts are particularly paying attention not only to the growth of the simple payment market but also to the fact that American teenagers are naturally using Apple Pay in their daily lives. Investment firm Piper Sandler said, "Apple Pay is the best payment app for teenagers," emphasizing, "When teenagers move, the country moves."

◆ Apple Pay’s Next Step

Apple is now preparing the next step. When news of Apple Pay’s arrival in Korea spread recently, the news of the ‘Apple Pay Later’ test in the U.S. drew attention.

Apple Pay Later is a kind of installment service that allows payment amounts to be split into four payments over six weeks without fees or interest. Following Apple CEO Tim Cook’s announcement of internal testing policies, reports have emerged that the scale of testing has expanded, raising expectations that the service could be officially launched as early as April. Additionally, Apple is pursuing an independent fintech project named ‘Break Out.’ Local media reported that Apple Pay is rapidly evolving in the U.S., stating, "Apple wants to become a financial company."

Apple Pay itself still faces challenges. Alex Liu, a 30-something office worker living in Harlem, Manhattan, said, "Since credit cards offer various benefits, I still use cards more often than Apple Pay," adding, "When I go out to exercise and need to spend money, I use Apple Pay as a backup." In other words, Apple Pay’s competitors in the U.S. are not Google Pay, Samsung Pay, or Venmo (PayPal), but the existing convenient payment systems such as credit/debit cards and cash.

According to the PYMNTS report, nine out of ten consumers with iPhones prefer other payment methods over Apple Pay in their daily lives. Bernstein analyst Harshita Rawat said, "It is very difficult to change consumer habits," adding, "It also took years for merchants to accept it." In a past survey by Bernstein, respondents said they preferred to go out without a phone rather than without a wallet, but experts pointed out that this is only possible if people can trust mobile payment systems as much as credit cards.