Upcoming Apple Pay shopping event in San Francisco offers discounts for iPhone-based mobil...

AppleInsider

Apple is holding an event in San Francisco next weekend to promote the use of Apple Pay in stores and restaurants, with a number of merchants in two popular shopping areas offering exclusive Apple discounts for customers using Apple's mobile payment platform to pay for goods and services.

A special Apple Pay Lose your wallet page advertising the promotion advises offers will be available in specific stores in the Hayes Valley area and the San Francisco Marina. The offers run from June 23 to June 25, and will only be available to in-store customers using Apple Pay for the transaction.

A total of 20 merchants will be providing Apple Pay-exclusive offers in Hayes Valley, with the majority taking between 10 percent and 25 percent off orders, including Azalea, Blue Bottle Coffee, Dish, Minimal, and Welcome Stranger. A few of the other offers include Souvla's Crumbled Melamakarona frozen yogurt for $1, large fries for $1 from Double Decker, and a free gift card from Aether.

In the Marina, 16 merchants have a similar selection of discounts and free items with Apple Pay orders for the weekend. For the Marina, the stores taking part include Over the Moon, Peet's Coffee, Gala, and Pladra.

There are also four listings on the page for "exclusive app and partner offers," including $5 off an order from Caviar and a Square pop-up shop in both areas. Two parking services are also taking part in the promotion, with Spot Hero offering a 50 percent discount on parking in San Francisco, and Pay By Phone holding a contest where participants can win a month of free parking.

Apple Pay is a considerable driver of revenue for Apple, forming part of its steadily growing Services product category that brought in $7.04 billion in revenue in the most recent quarterly earnings report. Apple's future plans to expand the use of Apple Pay includes a focus on person-to-person payments, with users able to transfer money to each other, then spend the funds on a prepaid "Apple Pay Cash" card.

ny1822

i love Apple Pay, but to call it a "considerable driver of revenue" is a bit of a stretch. They make .15 cents on every $100 spent.

from 2015:
"Piper Jaffray’s low-end estimate forecasts that this fee will bring in $118 million in revenue in 2015, increasing to $310 million in 2016. On the high end, Nomura’s equity analysts estimated it could account for $1.6 billion in revenue by 2017 – two years from now."

spamsandwich

NY1822 said:

i love Apple Pay, but to call it a "considerable driver of revenue" is a bit of a stretch. They make .15 cents on every $100 spent.

from 2015:
"Piper Jaffray’s low-end estimate forecasts that this fee will bring in $118 million in revenue in 2015, increasing to $310 million in 2016. On the high end, Nomura’s equity analysts estimated it could account for $1.6 billion in revenue by 2017 – two years from now."

Well, it's just a part of their overall digital services, which are considerable. Each component part just has to perform solidly to add up to a monster revenue stream.

soli

NY1822 said:

i love Apple Pay, but to call it a "considerable driver of revenue" is a bit of a stretch. They make .15 cents on every $100 spent.

from 2015:
"Piper Jaffray’s low-end estimate forecasts that this fee will bring in $118 million in revenue in 2015, increasing to $310 million in 2016. On the high end, Nomura’s equity analysts estimated it could account for $1.6 billion in revenue by 2017 – two years from now."

I think $1.6 billion in revenue in a year with what I assume is low overhead is considerable.

This site lists Square's entire revenue stream for 2016 as only $1.7 billion, which I've read elsewhere was up about 500% YoY (but I don't have a citation for that so I could be misremembering that stat).

• https://www.inc.com/profile/square?cid=full500016-list-763

ny1822

Soli said:

NY1822 said:

i love Apple Pay, but to call it a "considerable driver of revenue" is a bit of a stretch. They make .15 cents on every $100 spent.

from 2015:
"Piper Jaffray’s low-end estimate forecasts that this fee will bring in $118 million in revenue in 2015, increasing to $310 million in 2016. On the high end, Nomura’s equity analysts estimated it could account for $1.6 billion in revenue by 2017 – two years from now."

I think $1.6 billion in revenue in a year with what I assume is low overhead is considerable.

This site lists Square's entire revenue stream for 2016 as only $1.7 billion, which I've read elsewhere was up about 500% YoY (but I don't have a citation for that so I could be misremembering that stat).

• https://www.inc.com/profile/square?cid=full500016-list-763

1.6 Billion ($400 Million per Quarter) in terms of Apple Revenue is far from considerable. If you take Apple's lowest quarterly revenue from 2016 ($42.4B) and divide by $400 Million, the % of Apple Pay contributing to revenue is less than 1% of quarterly revenue. And that's using their worst quarter of the year. Granted, it's part of a growing services category, and from that angle it can be given more weight. It's all adds up, and for that, I can appreciate it.

ronn

NY1822 said:

i love Apple Pay, but to call it a "considerable driver of revenue" is a bit of a stretch. They make .15 cents on every $100 spent.

from 2015:
"Piper Jaffray’s low-end estimate forecasts that this fee will bring in $118 million in revenue in 2015, increasing to $310 million in 2016. On the high end, Nomura’s equity analysts estimated it could account for $1.6 billion in revenue by 2017 – two years from now."

Yeah, because these guys always get it right. Even taking their guesstimate, $1.6B is about what Square reportedly makes after several years in this space. IMO, that would qualify Apple Pay as a "considerable" source of revenue.

ny1822

ronn said:

NY1822 said:

i love Apple Pay, but to call it a "considerable driver of revenue" is a bit of a stretch. They make .15 cents on every $100 spent.

from 2015:
"Piper Jaffray’s low-end estimate forecasts that this fee will bring in $118 million in revenue in 2015, increasing to $310 million in 2016. On the high end, Nomura’s equity analysts estimated it could account for $1.6 billion in revenue by 2017 – two years from now."

Yeah, because these guys always get it right. Even taking their guesstimate, $1.6B is about what Square reportedly makes after several years in this space. IMO, that would qualify Apple Pay as a "considerable" source of revenue.

the article states "considerable source of revenue for Apple".....it's not comparing Apple, the largest market cap company ever, to a company in Square with a $9B market cap

lucasnave

Me and millions of Brazilians would love to have Apple pay ! We do not have this service in Brazil yet

soli

NY1822 said:

ronn said:

NY1822 said:

i love Apple Pay, but to call it a "considerable driver of revenue" is a bit of a stretch. They make .15 cents on every $100 spent.

from 2015:
"Piper Jaffray’s low-end estimate forecasts that this fee will bring in $118 million in revenue in 2015, increasing to $310 million in 2016. On the high end, Nomura’s equity analysts estimated it could account for $1.6 billion in revenue by 2017 – two years from now."

Yeah, because these guys always get it right. Even taking their guesstimate, $1.6B is about what Square reportedly makes after several years in this space. IMO, that would qualify Apple Pay as a "considerable" source of revenue.

the article states "considerable source of revenue for Apple".....it's not comparing Apple, the largest market cap company ever, to a company in Square with a $9B market cap

You're oddly reading the term "considerable" as "making up a majority of Apple's revenue." That's not what considerable means.

Here's an anecdote that's an amalgam of hundreds of people—friends, family, and strangers—over the last couple years as CA has started implementing a 10¢ fee for buying a plastic bag at stores in an attempt to reduce waste. Nearly everyone that comes across this for the first time is taken-aback by something that costs a dime simply because they expected it to be free. These are people worth many millions of dollars to those which a much lower net worth. The average person is recoiling my this "crazy" notion about the same in every case—if there's a discernible difference with people who are more affluent arguing with the teller or saying they have a bag out in there car they can use. Despite it only being a dime they found that cost considerable enough to be shocked by it, inquire about why it happened, when it started, where else it occurs (or doesn't occur), and more than a few simply refusing to pay the 10¢ so they awkwardly carry their stuff out in their hands. On person even dropped and broke their new glass bottle filled with something alcoholic outside the CVS and then wanted a free one. I didn't stick around so I don't know if they also blamed CVS for nothing using a bag.

Will Apple shut their doors if they stopped getting Apple Pay revenue? No, but you better believe that billions of dollars is considerable—especially since the net profit is surely higher than other areas of business—and something that adds significant value to their products. If that value were to drop, you best believe Tim Cook would have some considerable concern.

edited June 2017

strangedays

Yeah if it is 1.6 billion or whatever, that's a considerable chunk of change coming in every year. Many businesses would love to have that as their annual revenue. It doesn't matter that it pales compared to their primary revenue stream, which is iphone, since iphone is the single most successful consumer product in human history. 

wigby

Soli said:

NY1822 said:

ronn said:

NY1822 said:

i love Apple Pay, but to call it a "considerable driver of revenue" is a bit of a stretch. They make .15 cents on every $100 spent.

from 2015:
"Piper Jaffray’s low-end estimate forecasts that this fee will bring in $118 million in revenue in 2015, increasing to $310 million in 2016. On the high end, Nomura’s equity analysts estimated it could account for $1.6 billion in revenue by 2017 – two years from now."

Yeah, because these guys always get it right. Even taking their guesstimate, $1.6B is about what Square reportedly makes after several years in this space. IMO, that would qualify Apple Pay as a "considerable" source of revenue.

the article states "considerable source of revenue for Apple".....it's not comparing Apple, the largest market cap company ever, to a company in Square with a $9B market cap

You're oddly reading the term "considerable" as "making up a majority of Apple's revenue." That's not what considerable means.

Here's an anecdote that's an amalgam of hundreds of people—friends, family, and strangers—over the last couple years as CA has started implementing a 10¢ fee for buying a plastic bag at stores in an attempt to reduce waste. Nearly everyone that comes across this for the first time is taken-aback by something that costs a dime simply because they expected it to be free. These are people worth many millions of dollars to those which a much lower net worth. The average person is recoiling my this "crazy" notion about the same in every case—if there's a discernible difference with people who are more affluent arguing with the teller or saying they have a bag out in there car they can use. Despite it only being a dime they found that cost considerable enough to be shocked by it, inquire about why it happened, when it started, where else it occurs (or doesn't occur), and more than a few simply refusing to pay the 10¢ so they awkwardly carry their stuff out in their hands. On person even dropped and broke their new glass bottle filled with something alcoholic outside the CVS and then wanted a free one. I didn't stick around so I don't know if they also blamed CVS for nothing using a bag.

Will Apple shut their doors if they stopped getting Apple Pay revenue? No, but you better believe that billions of dollars is considerable—especially since the net profit is surely higher than other areas of business—and something that adds significant value to their products. If that value were to drop, you best believe Tim Cook would have some considerable concern.

Fiscally, Apple Pay is not truly considerable for Apple nor does it ever have the potential to grow into a substantial business by Apple standards. But your anecdote does prove the power of 'substantial' as it pertains to the psychology of the consumer.

People and merchants that use Apple Pay will become more comfortable with Apple in their lives as a payment system, content delivery service, ridesharing service and so on. This could result in truly substantial future revenue the same way that the iOS ecosystem benefits from each and every component.

ronn

NY1822 said:

Yeah, because these guys always get it right. Even taking their guesstimate, $1.6B is about what Square reportedly makes after several years in this space. IMO, that would qualify Apple Pay as a "considerable" source of revenue.

the article states "considerable source of revenue for Apple".....it's not comparing Apple, the largest market cap company ever, to a company in Square with a $9B market cap

That's a convoluted way to be negative about Apple Pay. $1.6B a year is considerable no matter how you look at it. If there are any comparisons, it's simply between Apple Pay (a tiny fraction of Apple's overall business) and Square; so again, considering the lead Square had and how their readers are given away, AP is a considerable source of revenue. 

edited June 2017

soli

wigby said:

Soli said:

NY1822 said:

ronn said:

NY1822 said:

i love Apple Pay, but to call it a "considerable driver of revenue" is a bit of a stretch. They make .15 cents on every $100 spent.

from 2015:
"Piper Jaffray’s low-end estimate forecasts that this fee will bring in $118 million in revenue in 2015, increasing to $310 million in 2016. On the high end, Nomura’s equity analysts estimated it could account for $1.6 billion in revenue by 2017 – two years from now."

Yeah, because these guys always get it right. Even taking their guesstimate, $1.6B is about what Square reportedly makes after several years in this space. IMO, that would qualify Apple Pay as a "considerable" source of revenue.

the article states "considerable source of revenue for Apple".....it's not comparing Apple, the largest market cap company ever, to a company in Square with a $9B market cap

You're oddly reading the term "considerable" as "making up a majority of Apple's revenue." That's not what considerable means.

Here's an anecdote that's an amalgam of hundreds of people—friends, family, and strangers—over the last couple years as CA has started implementing a 10¢ fee for buying a plastic bag at stores in an attempt to reduce waste. Nearly everyone that comes across this for the first time is taken-aback by something that costs a dime simply because they expected it to be free. These are people worth many millions of dollars to those which a much lower net worth. The average person is recoiling my this "crazy" notion about the same in every case—if there's a discernible difference with people who are more affluent arguing with the teller or saying they have a bag out in there car they can use. Despite it only being a dime they found that cost considerable enough to be shocked by it, inquire about why it happened, when it started, where else it occurs (or doesn't occur), and more than a few simply refusing to pay the 10¢ so they awkwardly carry their stuff out in their hands. On person even dropped and broke their new glass bottle filled with something alcoholic outside the CVS and then wanted a free one. I didn't stick around so I don't know if they also blamed CVS for nothing using a bag.

Will Apple shut their doors if they stopped getting Apple Pay revenue? No, but you better believe that billions of dollars is considerable—especially since the net profit is surely higher than other areas of business—and something that adds significant value to their products. If that value were to drop, you best believe Tim Cook would have some considerable concern.

Fiscally, Apple Pay is not truly considerable for Apple nor does it ever have the potential to grow into a substantial business by Apple standards. But your anecdote does prove the power of 'substantial' as it pertains to the psychology of the consumer.

People and merchants that use Apple Pay will become more comfortable with Apple in their lives as a payment system, content delivery service, ridesharing service and so on. This could result in truly substantial future revenue the same way that the iOS ecosystem benefits from each and every component.

That's like the App Store as the quintessential example. Apple recently stated they've paid out $70 billion to developers, which I think means they've taken $30 billion in revenue for themselves. That's after 9 years with a current YoY growth of 70%. And if consider that it took nearly a decade to achieve that means that it's been a much lower revenue than Apple Pay for most of its existence, and I bet Apple has a much higher expense than they do for Apple Pay since they have to keep their own servers, update the IDE, and verify every app that comes through. Yet, I doubt anyone would say that the App Store isn't significant to Apple's success with the iPhone or think it's not important because it's just a blip compared to iPhone sales.

securtis

Apple has enough money laying around to buy everyone new card readers, give users large kickbacks like this, or some combo of both. I wish apple wasn't so timid pushing apple pay. 

steveau

Dear Malcolm, notwithstanding the considerable discussion on these pages regarding the accuracy of your assertion that "Apple Pay is a considerable driver of revenue for Apple", I urge you to continue to write using a graduate level vocabulary, rather than taking the easy option of dumbing down to a junior high vocabulary. Some of us appreciate your erudition.

fred1

If Apple Pay can be used for web purchases, why is this event limited to physical stores?

mpantone

It is impossible to know for sure why Apple is promoting this event, but there are several notable points.

This is happening at a select group of independent retailers (apart from Peet's) in two upper-income San Francisco neighborhoods for one weekend. Whether by coincidence or design, it also happens to be taking place during SF Pride Week whose activities are not concentrated in either neighborhood.

We do not know if Apple is subsidizing the discounts at these retailers, if Apple is waiving or reducing the transaction fees, or if Apple has somehow subsidized some of the infrastructure/hardware costs at these retailers.

I think it is safe to assume that Apple is not focusing this event to get major retail chains like Safeway or CVS to sign up for Apple Pay. My guess is that they are trying to get more independent retailers to adopt Apple Pay.

For sure, there should be no deductions about Apple's relationship with companies like McDonald's which happens to be a franchise operation; the individual stores are pretty much owned by independent operators. McDonald's Corporate can "encourage" NFC transactional POSes amongst their franchisees, but can't control how well they are implemented and maintained, at least on a daily operational level.

Also, the fact that Apple is promoting this event cannot be used to explain the deployment (or lack thereof) in any other foreign marketplace. In most cases, lack of Apple Pay adoption is largely due to the reluctance of local banks, not Apple's disinterest. But even if local financial institutions adopt Apple Pay, there is still consumer acceptance to earn, something that Apple has not done in Japan which has a long history of NFC payment systems (Suica, Pasmo, IC).

Just a few thoughts.