Apple Pay isn't Profitable For Apple--Yet
David Curry | | Jan 27, 2015 08:36 AM EST |
(Photo : Apple) Apple Pay isn't making that much money.
Apple is preparing to announce record sales for its iPhone but one part of Apple's portfolio not making any revenue at the moment is Apple Pay.
The new mobile payments service launched in 2014 has received some support from retail, banks and consumers, but not enough to make any real income from the service.
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Apple Pay is also only available in the U.S., limiting the scope of retail support. If there's anywhere to start, the U.S. would be the place to do it. Expansion in China through Alibaba and Europe is scheduled for this year, however.
On top of the current lack of support, Apple also takes a minute amount per transaction. If someone pays US$100 through the service, Apple will only receive 15 cents. In order to hit one percent of Apple's total revenue, over US$451 billion worth of transactions would need to be completed per quarter.
The overarching goal of Apple Pay is to tie more customers into using an iPhone by setting-up a payments system only available on iOS devices.
This sort of feature has been used before by Apple with iTunes, iMessage and Touch ID, all features consumers may consider necessary on a mobile device.
If Apple can keep 10 percent more consumers from switching to an Android device through Apple Pay, it will be worth its cost in gold, considering the brand loyalty Apple has already gained in the eight years of mobile development.
Another factor that could come into play further down the road is Apple's full push into the banking and payment market, setting up its own banking system where it offers loans, credit and other typical 'bank' features.
These private banks are already starting to launch in China, with Tencent and Alibaba signed up to be the first in the country.
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