The new Apple iPhone and operating system are set to launch in September and include new features likely to grow adoption of Apple Pay and contactless mobile payments at the physical point-of-sale. Apple Pay is set to rollout in several more countries by year’s end while the newest operating system (iOS 11) will support Apple Pay Cash Card, a stored value account for sending and receiving person-to-person payments as well as making online and contactless payments via Apple Pay.
Apple Pay Cash adds significant new payment options and features for Apple users. First, it supports person-to-person payments directly within iMessage, which has the potential to immediately grab market share from other P2P money transfer services like Venmo/PayPal, Square Cash and Facebook Messenger. While Venmo and Facebook Messenger have made sending P2P payments from a mobile device very easy and convenient, bringing this within text messaging or iMessage makes the P2P payment even more seamless, and keeps everything within the Apple ecosystem. Consumers don’t need to purchase the latest iPhone 8 to use Apple Pay Cash, just upgrade to iOS 11, the updated operating system that is expected to launch with the new iPhone model.
Second, the Apple Pay Cash Card, which is a stored value account that essentially serves as a digital prepaid card, has the potential to spur many more consumers using Apple Pay for mobile contactless payments, particularly among underbanked and youth consumer demographics. When receiving a P2P payment via Apple Pay, the funds go to the receiving party’s Apple Pay Cash Card, a digital stored value, account. From there the consumer can transfer funds to their bank account, or leave them in stored balance to spend via Apple Pay, which they can use online or in-store. Apple has partnered with Greendot to support the digital Apple Pay Cash prepaid card account.
Having this stored value account will likely increase adoption and use of Apple Pay. Although Apple continues to form partnerships with card issuing credit unions and regional banks, including 21 new issuers announced in July, not all cardholders in the U.S. are covered. Consumers who don’t have payment cards supported in Apple Pay may very well receive P2P transfers and opt to spend that money online or in-store using Apple Pay, rather than transferring the funds to their bank account.
Even more lucrative is the potential to reach unbanked and underbanked consumers who may now start being able to use Apple Pay. Many surveys and studies have shown that iPhone shoppers spend more per transaction online than do Android users for m-commerce transactions, and there is empirical evidence to support iPhone users, on average, are more affluent. While iPhone users tend to be more affluent, this doesn’t imply there are no unbanked or underbanked iOS users, and many of these consumers will now gladly use Apple Pay with a stored value account.
Apple Pay may also be able to gain more new users through attracting underbanked youth. While those under 18 may not have credit or debit cards, many are certainly interested in using Apple Pay. In the very-near-future parents will be able to pay their children’s allowances via iMessage with a P2P transfer that goes right to the adolescent’s Apple Pay Cash stored value account. Now this allowance money can be spent online or in-store with Apple Pay, or as a way to split bills with and pay back friends.
Apple Pay Cash will only be available in the United States before being rolled out to other countries, but with Apple continuing to make inroads into launching Apple Pay in more countries and regions around the world it likely won’t be too long until Apple Pay Cash expands internationally as well. In early August the company announced plans that Apple Pay would be available for consumers to use in the United Arab Emirates, Sweden, Finland and Denmark by the end of 2017. Apple is also actively working to go live in Germany after launching Apple Pay in Italy last May. By end of year Apple expects to have Apple Pay live in 20 countries, but the timing of the international rollout for Apple Pay Cash is likely contingent on how well it is received in the United States.
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