Can Apple beat PayPal and Venmo in the mobile payments war?


There’s a reason everyone seems to be getting into mobile payments. With the increasing use of smartphones and the search for faster, simpler and more secure financial transactions, mobile payments could become a $ 3.4 trillion in industry by 2022. In the United States last year, eMarketer estimated this to be a $ 49 billion market already.

Consumer options are diverse: there is Apple Pay, Samsung Pay and Google Pay; PayPal, Venmo, Square and Square Cash; alternatives backed by banks like Zelle and Chase Pay; and options built into the app through things like WhatsApp or Facebook Messenger. As consumers ditch cash, checks, and even credit cards, everyone is dabbling in mobile payments, but perhaps none with Apple’s zeal.

First introduced in October 2014, Apple Pay has grown into one of the leading digital payment services for US consumers, but it is not yet dominating the global market. Chinese competitors WeChat Pay and Alipay have one billion users combined, followed by PayPal with 210 million users and Apple with 87 million, as of August 2017. Apple is actively trying to close that gap using a number of different tactics, and it works, sort of.

For starters, Apple has worked to broaden its base by improving its compatibility with local financial institutions and credit cards so that the service is available to more iOS users. Every few weeks, Apple has extended Apple Pay to new banks and credit unions, and now more than 2,700 establishments support the service. It has also spread to new countries, most recently Norway and Poland. And it has spread beyond retail purchases to peer-to-peer payments, largely the domain of Venmo. Apple presented Apple cash payment in December. For ease of adoption, Apple Pay Cash is integrated directly into the Messages app, making it a more convenient, integrated payment option for iOS users when discussing invoice details via text message with friends.

Apple also has a powerful, if not boring, tool it uses to woo iPhone owners to its payments platform: a barrage of incessant, incessant notifications.

“I have just updated my iPhone 6 Plus to, and … I periodically receive a notification from the Wallet application to add a credit card”, Apple forum user wrote in 2016. “I never have and never will use Apple Pay. I don’t care how safe or convenient it is, I don’t feel like using this feature and I’m tired of seeing the notification pop up five times a day.

“Thanks but, no thanks. I’ve reset my phone, turned off notifications, and yet I still get the prompt… over and over again,” another user said of the “annoying” “Complete your setup by adding Apple Pay” notification after iOS 11 launched in late 2017.

After the launch of Apple Pay Cash, the persistent pop-up notification in Apple’s Messages app prompted an iOS user to assume their phone has succumbed to malware.

While Apple’s insistence that your phone isn’t fully set up until you’ve added a card to Apple Pay may be infuriating to some, its tactics seem to be working. Apple Pay has seen impressive year-over-year increases, with one estimate 127 million users from the first quarter of this year.

Apple has good reason for being so aggressive with its user acquisition tactics: it has other competitors coming for it. Unlike other big retailers like Walgreens, Best Buy, and Target, Walmart has refused to adopt Apple’s mobile payment platform in its stores in favor of its own. Like Chinese mobile payment apps, its option, Walmart Pay, uses an onscreen QR code that is scanned to complete mobile transactions. Apple’s method relies on near-field communication technology built into a phone or watch, which can act as a barrier to entry for owners of older phones. Walmart Pay debuted in December 2015, and it could overtake Apple Pay in terms of active users before the end of the year. And Walmart isn’t Apple’s only new rival: the Starbucks app also appears to have a higher number of active users than Apple Pay, and you can use Apple Pay at Starbucks.

Apple clearly has a long way to go. Recent estimates suggest that only 16% of iPhone owners are Apple Pay users as well, which may be part of why Apple has become more aggressive with its Apple Pay notifications since the launch of Apple Pay Cash. At the end of last year, Apple Pay represented 90 percent of mobile transactions based on NFC worldwide. Compared to other NFC based platforms, Apple is crushing it. But if the company really wants Apple Pay and Apple Pay Cash to be our preferred payment methods both at retailers and among friends, they’ll have to do more than bully us into losing our banking information. We’re going to have to convince users that Apple Pay is faster and more convenient than withdrawing a credit card, and push retailers to do the same. It may be a tall order. Chinese citizens have been much more receptive to ditching their physical wallets for their phones than US buyers. But Apple has managed to make smartphones an indelible part of our daily lives. He is also able to do this for payments.

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