The term Apple Pay refers to a mobile contact payment system and digital wallet service offered by Apple. The service allows users to pay for products and services using near-field communication (NFC) at the point of sale whether in person via iOS apps or remotely over the internet. Apple launched the service in 2014. Apple Pay is billed as an alternative to credit and debit cards, including chip and PIN cards as well as traditional magnetic stripe cards. Most major credit and debit cards currently support Apple Pay.
Key Takeaways
Apple Pay is a mobile payment system that was in use by close to 441 million people around the world as of September 2019.
The system is supported by most major credit cards and payment networks.
Apple Pay allows customers to tap and pay using NFC-enabled point-of-sale terminals, or via online check-out.
Apple Pay also allows users to send and receive money from other users via messaging to an iOS-enabled device.
Although consumers were initially slow to adopt Apple Pay, it is the most popular digital payment service in the U.S.
Understanding Apple Pay
Apple Pay requires users to upload their payment information to Apple Wallet and follow the steps through verification with the card issuer. Once uploaded, all information required for payment is linked to the app, so the user does not need to physically handle a card upon payment. Devices that support Apple Pay include the iPhone 6 and later models, Apple Watch, iPad, and MacBook.
Apple Pay works with any contactless payment system, not just Apple-specific terminals. The near-field communication antenna embedded within themallows Apple devices to wirelessly communicate with the chosen point-of-sale (POS) system.
In addition to its ease of use, one of Apple Pay’s main positives is the increased level of security it provides. Apple Pay essentially creates a token within its infrastructure that replaces credit card information. In its place, the system creates what is known as a Device Account Number that is encrypted and stored in the device’s Secure Element. Upon payment, it is the token that the merchants use to process the transaction, meaning they never have direct access to the card details.
Fingertip recognition software included within Apple’s Touch ID is another verification feature that ensures purchases are made only by the authorized user. Face ID figures to become a more ubiquitous security feature throughout Apple products as well. Apple promises never to share card information across its cloud. While this means users have to manually enter their card information into each device, it adds to the security of the service.
Apple first launched its own credit card, aptly called the Apple Card, in the United States in August 2019.
Growth of Apple Pay
Consumer adoption of Apple Pay has been somewhat slow, but its popularity appears to be growing, along with other forms of mobile payment in the U.S. This is especially true among young Americans, who are using digital wallets more frequently on their smartphones. In fact, the payment service earned as much as 48% of the mobile wallet market in the United States, according to an August 2022 report from PYMTS.com. That's a jump from the 30.9% reported in 2019.
Recognition that the physical act of making purchases using Apple Pay is straightforward and secure should continue to help change consumer behaviors. All the user has to do is select a card on the app and hold their iPhone over the contactless payment reader while keeping their finger on the Touch ID to complete the transaction.
Apple Pay enables you to make secure, contactless purchases using your Apple Cash, your Apple Card, and any other credit and debit cards that you add to Wallet. For apps or merchants that don't accept Apple Pay, use your Apple Cash virtual card number to make your purchase wherever Visa is accepted.
The number of American Apple Pay users has increased 18.5% since 2022 for a CAGR of 8.86%. In one fiscal quarter (2022 Q2), American consumers used Apple Pay to purchase $199 billion in consumer goods.
The payment data is generated on the user's device and securely sent to Apple Pay servers to be encrypted with the merchant-specific payment processing certificate. The payment data is then returned to your website. The data is then sent to the payment service provider to be decrypted and processed.
Apple Pay is not accepted at all retailers and not compatible with all banks or card issuers. Backup may be required, just in case. Apple Pay only works if your phone does. You may still need to carry a physical credit card as a backup in case your battery dies or you misplace your phone.
Apple Pay is safer than using a physical credit, debit or pre-paid card. Face ID, Touch ID or your passcode are required for purchases on your iPhone, Apple Watch, Mac or iPad. Your card number and identity aren't shared with merchants, and your actual card numbers aren't stored on your device or on Apple servers.
For the services of the payment infrastructure, the merchant pays fees to the issuer, card association and acquirer which can add up to 2 – 3%. In other words, the cardholder pays the price plus interest and the merchant receives the price less the fees.
Apple is forecast to grow earnings and revenue by 7.9% and 7.6% per annum respectively. EPS is expected to grow by 10% per annum. Return on equity is forecast to be 552.7% in 3 years.
Apple Pay is used by 51% of millennial digital wallet users and 73% of Gen Z digital wallet users. High-income customers: Apple Pay is popular with individuals who earn higher-than-average incomes. The median income of iPhone app users is $85,000, compared with $61,000 for Android app users.
Apple Pay is built into iPhone, Apple Watch, Mac and iPad. Start by adding your credit or debit card to the Wallet app on your iPhone, and you'll have the option to add it to your other devices in one easy step. When you want to pay, just double-click, tap and you're set.
You hold your iPhone or Apple watch to the POS, and SE chip of your device generates a Dynamic Cryptogram (encrypted transaction details) and transfer this and DAN number to the POS through NFC. POS machine sends this payment request to the Acquirer Bank (the bank of receiver you are paying).
Apple Pay is designed with your security and privacy in mind, making it a simpler and more secure way to pay than using your physical credit, debit, and prepaid cards. Apple Pay uses security features built-in to the hardware and software of your device to help protect your transactions.
Apple Pay allows customers to tap and pay using NFC-enabled point-of-sale terminals, or via online check-out. Apple Pay also allows users to send and receive money from other users via messaging to an iOS-enabled device.
Apple Pay is a very secure way to make payments. This is because your card numbers are not stored on your device, and are never shared by Apple Pay, or sent with your payment. Instead, Apple Pay gives you a unique Device Account Number, that's encrypted and stored in a secure part of your iPhone, iPad or Apple Watch.
Apple Pay is designed with your security and privacy in mind, making it a simpler and more secure way to pay than using your physical credit, debit, and prepaid cards. Apple Pay uses security features built-in to the hardware and software of your device to help protect your transactions.
When you transfer money from your Apple Cash1 card, you can either use a bank transfer to send funds to your bank account in 1 to 3 days or you can use Instant Transfer2 to send funds instantly3 to an eligible Mastercard or Visa debit card. You can also send money to an individual in Messages or Wallet.
Introduction: My name is Annamae Dooley, I am a witty, quaint, lovely, clever, rich, sparkling, powerful person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
