Apple Pay’s Success Could Be Hindered By Retailer Opposition

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The buzz has been around Apple Pay over the last few months. Apple Pay is Apple’s (AAPL) answer to eBay’s (EBAY) PayPal, which generated $7.6 billion in revenue over the last 12 months. Apple Pay service was recently integrated on two popular apps, that of and ballpark. This marked yet another success for Apple’s payment service which was announced in October. However, Apple Pay is facing stiff opposition from big retailers like Wal-Mart (WMT) , Best Buy (BBY) and Target (TGT) , who aren’t supporting the platform for in-store sales. The service has come a long way since its launch, rapidly adding partner banks, merchants and apps and building a strong network in a relatively short time frame.

Apple Pay's Journey So Far

Apple Pay will be a significant addition to the Apple ecosystem and will also contribute significantly to Apple’s revenues, which was highlighted in our earlier posts. Hence, Apple’s new payment service is of critical importance to Apple investors. The service has been adding partner banks, apps and merchants over the last few months, thereby increasing the support network for Apple Pay. The company recently added (PCLN) and ballpark to the list of apps accepting payments through Apple pay.

Priceline became the first major online travel Agency (OTA) to add support for payment through Apple Pay. The service will be available to users who have the latest updated Priceline app on their iPhone 6, iPhone 6 plus, iPad mini 3 and iPad Air 2. The service makes the checkout process easier with the touch ID used to confirm payments. However, the payment service is currently available only on the express deals product.

The other big app announcement was the integration of Apple Pay on ballpark, which will allow users to pay for game tickets using the service. However, here again the service is limited to select members when booking for one game.

According to a post on, Apple Pay added ten more banks which will support Apple Pay starting Tuesday, December 16. The latest additions include SunTrust, Barclaycard and USAA. Following the latest additions, Apple Pay is now supported by cards accounting for 90 percent of credit card transactions in the United States.

The addition of apps, banks and merchant partners has seen support for Apple Pay grow over the last few months. The growth of Apple Pay augurs well for Apple, as global online payments growth is set to explode in the coming years.

Source: Statista

According to Statista, global online payments are expected to triple in volume from 2013-2017, growing at an average annual growth rate of 33% over the four year period. Apple can use the ramp-up in overall online payments to drive payments volume as well as revenue from its new payments service.

Problems Ahead for Apple Pay

However, not all is hunky dory with Apple Pay. A big show stopper for Apple’s new service has been the opposition from merchant customer exchange (MCX), a group which has giants like Wal-Mart, Best Buy and Target Corp among its ranks. The group has opposed Apple Pay due to the high fees retailers will be required to pay to banks for transactions through Apple Pay which uses credit cards.

Moreover, the group has also been working on a rival platform to Apple Pay, CurrentC which will directly debit customers checking accounts rather than linking purchases to credit cards. This will help the retailers skip the 2% to 3% commission charged by credit card companies. Business Insider intelligence analyst John Heggestuen put the total commission paid by retailers to credit card companies in 2013 at a staggering $48 billion. CurrentC aims to help retailers avoid paying these commissions. With CurrentC set for an early 2015 launch, the competition for Apple Pay will be on the rise.


In conclusion, Apple Pay has made significant strides in adding banking partners and merchant partners. However, If Apple Pay wants to become a huge success, bringing on everyday shopping retailers like Wal-Mart, Best Buy will be crucial, which currently looks highly unlikely, if not impossible.

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