Apple Pay forecast to narrow gap with PayPal, hit $190B in 2022

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in iPhone
While it's likely to remain a distant second in terms of overall transactions, Apple Pay is poised to narrow the volume gap with rival platform PayPal in next few years, according to Morgan Stanley analysts.

Apple Pay Suica


Apple Pay transactions are forecast to reach $190 billion in 2022, and $304 billion by 2027, the firm said in a memo issued on Wednesday. That ranks against PayPal figures of $431 billion and $579 billion, respectively, though excluding any offline wallet possibilities, which could theoretically add as much as $257 billion to PayPal's volume by 2027.

While PayPal has "the best consumer penetration by far," Apple is "the clear leader among app/phone-based digital wallets, and has seen 300bps [basis points] of growth in online usage since summer 2018 survey," the memo continued.

"We expect the new Apple Card, launching this summer with Goldman Sachs and Mastercard and 2% cash back on Apple Pay purchases, will help drive up Apple Pay awareness and usage," the analysts added.

In a second memo Morgan Stanley positioned the Apple Card as a win-win for Apple and Goldman Sachs, the former by driving more people to Apple stores -- where Apple reaps higher profits -- as well as by increasing awareness of the Apple Wallet and Apple Pay, and boosting overall services revenue.

For Goldman Sachs the card is expected to aid a strategy towards "a more stable revenue source than trading revenues," and perhaps lure Apple Card customers into cross-selling opportunities, or at least raising brand visibility.

The two companies will likely change the card's reward structure within the first two years, the analysts said, because it could draw in "materially more card holders" who would spend more on Apple Pay and other services.

"We believe a rewards boost, such as to 5% at Apple Stores, 3% on Apple Pay, or inclusion of a new category such as dining, would significantly increase the card uptake and the EPS benefit," the second memo argued. "Apple could fund this reward boost from the higher margin generated by pulling 3rd party sales to its own retail and on-line stores."





The Apple Card is currently in testing ahead of a launch within the next few months. Though primarily digital, owners will also get a real-world titanium card for cases when Apple Pay isn't available.

Comments

  • Reply 1 of 19
    eightzeroeightzero Posts: 2,366member
    Looking forward to Apple Card. I will likely never use the physical one, might not even carry it with me, as I get a better cash back deal with other physical cards. "This summer" means any time before mid-September. It wouldn't shock me if it was delayed further though. Its a big undertaking with some significant risk. 
    watto_cobra
  • Reply 2 of 19
    SoliSoli Posts: 8,975member
    eightzero said:
    Looking forward to Apple Card. I will likely never use the physical one, might not even carry it with me…
    That's my plan and what I assume Apple expects. People on these forums keep claiming that they receive better deals for an across-the-board cash back on their current card but I haven't seen a single free card that offers a minimum of 2% back for Apple Pay-based payments.
    superklotoncaladanianlolliverwatto_cobra
  • Reply 3 of 19
    Apple Pay will never 'catch up' to Paypal and the rest in sheer volume and numbers... for one important reason: It is APPLE. And not everyone is a bonified Apple Sheep. Until (if ever) AP crosses over to the Mainstream financial markets... there will always be a finite amount of 'converted' or convertible individuals.
    AppleExposedlkruppCarnage
  • Reply 4 of 19
    davgregdavgreg Posts: 378member
    I use both Apple Pay and PayPal, but for different things. Apple Pay is a convenient way to clear credit and debit cards connected to the account. PayPal is a good way to insulate your online payments from your accounts.

    What I want is for Apple to make a big push into online utility payments. My Gas and Electric bills clear through some vulture outfit called Bill Matrix that takes a $2-3 drag just so you can use your debit or credit instead of handing them the keys to your checking account. Apple is finally available from Comcast for my ISP bill, but they need to go after that market.

    As to credit cards:
    I currently have a card that is 0.0% APR for 18 months and there will be another waiting when the teaser rate expires.

    There is no way I would pay the usurious rates common to credit cards- especially to anything related to Goldman - for some cash back scheme. Tell them to keep the cash back and lower the interest rate. The rates Apple and Goldman will be charging used to be the kind available from loan sharks.
  • Reply 5 of 19
    davgregdavgreg Posts: 378member
    Soli said:
    People on these forums keep claiming that they receive better deals for an across-the-board cash back on their current card but I haven't seen a single free card that offers a minimum of 2% back for Apple Pay-based payments.
    USAA gives me 0.0% APR. I do not need 2% back on a card charging 14.9% or greater.
  • Reply 6 of 19
    davgreg said:
    Apple is finally available from Comcast for my ISP bill, but they need to go after that market.
    What do you mean? You can use Apple Pay to pay your Comcast bill? Is that through the website or an app?
    Edit: I just checked the App Store and found Xfinity My Account and it says it’s possible to pay the bill via Apple Pay. Nice. Thanks for pointing that out!
    davgreg said:
    Soli said:
    People on these forums keep claiming that they receive better deals for an across-the-board cash back on their current card but I haven't seen a single free card that offers a minimum of 2% back for Apple Pay-based payments.
    USAA gives me 0.0% APR. I do not need 2% back on a card charging 14.9% or greater.
    I understand wanting a low APR but many people pay their credit card bill in full every month and incur no interest charges. In that case it’s kinda nice to get cash back.
    edited July 10 lollivertoysandmematrix077watto_cobra
  • Reply 7 of 19
    eightzeroeightzero Posts: 2,366member
    davgreg said:
    Soli said:
    People on these forums keep claiming that they receive better deals for an across-the-board cash back on their current card but I haven't seen a single free card that offers a minimum of 2% back for Apple Pay-based payments.
    USAA gives me 0.0% APR. I do not need 2% back on a card charging 14.9% or greater.
    I don't get this. The APR on a card is immaterial to me because I never finance anything on it. I sort of get using a 0% card to float a large purchase, thus using the cash that would otherwise pay for it in some other interest-bearing instrument. But current rates are so low as the difference between that and a 2% cash back deal seems negligible - and there is an impact to one's credit score.

    I'd sign up for a credit card that gave me 3% or more cash back and charged 30-40-50% APR...because I'd never be subject to that fee.
    lollivermatrix077chiawatto_cobrasuperkloton
  • Reply 8 of 19
    davgreg said:
    There is no way I would pay the usurious rates common to credit cards- especially to anything related to Goldman - for some cash back scheme. Tell them to keep the cash back and lower the interest rate. The rates Apple and Goldman will be charging used to be the kind available from loan sharks.
    davgreg said:
    Soli said:
    People on these forums keep claiming that they receive better deals for an across-the-board cash back on their current card but I haven't seen a single free card that offers a minimum of 2% back for Apple Pay-based payments.
    USAA gives me 0.0% APR. I do not need 2% back on a card charging 14.9% or greater.
    A credit card is, despite the name, the worst way to get a credit. The purpose of a credit card is to pay conveniently - if you pay back all of your expenses every month there is 0% interest with Card. Anybody who does not pay back immediately what he spent with a credit card has just no idea of economy and finances.
    caladanianlolliverJWSCtoysandmematrix077Carnagewatto_cobra
  • Reply 9 of 19
    apple ][apple ][ Posts: 8,680member
    Who cares about APR?

    If somebody uses a credit card and doesn't pay off their bills in full, well, then they should probably stay away from the Apple Card and all credit cards.

    I couldn't give a crap about the APR on any card, as it is 100% irrelevant to me and to all others who know how to manage their finances.
    lkruppcaladanianlolliverJWSCtoysandmewatto_cobrasuperkloton
  • Reply 10 of 19
    lkrupplkrupp Posts: 7,162member
    Apple Pay will never 'catch up' to Paypal and the rest in sheer volume and numbers... for one important reason: It is APPLE. And not everyone is a bonified Apple Sheep. Until (if ever) AP crosses over to the Mainstream financial markets... there will always be a finite amount of 'converted' or convertible individuals.
    Who are the “rest” you mention? The article states that Apple Pay is already second to PayPal in volume and numbers. "While PayPal has "the best consumer penetration by far," Apple is "the clear leader among app/phone-based digital wallets, and has seen 300bps [basis points] of growth in online usage since summer 2018 survey," the memo continued.”

    Google Pay, Samsung Pay aren’t even in the running apparently. That must really frost your Android cojones. How does one become a bonafide Apple Sheep? Is there a form to fill out and send in to Apple?   
    lolliverJWSCWgkruegerchiawatto_cobra
  • Reply 11 of 19
    SoliSoli Posts: 8,975member
    That's my plan and what I assume Apple expects. People on these forums keep claiming that they receive better deals for an across-the-board cash back on their current card but I haven't seen a single free card that offers a minimum of 2% back for Apple Pay-based payments.
    Er, …minimum of better than 2%…

    edit: Some come up to 2%, but even the most coveted cards only offer a higher kickback for select items when used with Apple Pay purchases. For example, The Amex Platinum is 1% for the minimum for Apple Pay but costs $550 per annum. If you're spending well over $11k per year for hotels and flights then that could be very beneficial since you get 5% back on those. Most would probably do better with an Amex Blue Cash Preferred card with 6% on supermarkets, 3% on gas with no annual fee. Or there is the Amex Cash magnet card which is 1.5% across the board and no annual fee, f you don't want to deal with the time and effort shuffling cards to maximize your return. For me, 2% with Apple Pay, which is now the majority of my purchases will be pretty good and will only cause me to consider killing one of my cards which is my current default card at 1.5% cash back.
    edited July 10 watto_cobra
  • Reply 12 of 19
    Hello, long time reader, first time poster here...

    Doesn't anyone find $190B in 3 years hugh!  iPhones brought in around $160B last year?  While it cost money to make iPhones...how much does it cost to "make" ApplePay? Wonder what that'll do to earnings and dividends!!


    JWSCtoysandmewatto_cobra
  • Reply 13 of 19
    SoliSoli Posts: 8,975member
    zenoplay said:
    Hello, long time reader, first time poster here...

    Doesn't anyone find $190B in 3 years hugh!  iPhones brought in around $160B last year?  While it cost money to make iPhones...how much does it cost to "make" ApplePay? Wonder what that'll do to earnings and dividends!!
    Maybe I'm wrong about how that gets accounted, but I think that's money going through the service, not revenue gained by Apple.
    lolliverCarnagechiawatto_cobra
  • Reply 14 of 19
    Soli said:
    zenoplay said:
    Hello, long time reader, first time poster here...

    Doesn't anyone find $190B in 3 years hugh!  iPhones brought in around $160B last year?  While it cost money to make iPhones...how much does it cost to "make" ApplePay? Wonder what that'll do to earnings and dividends!!
    Maybe I'm wrong about how that gets accounted, but I think that's money going through the service, not revenue gained by Apple.
    Ah, you are right.  The $$$ clouded my vision.  That's just the transactions...not what Apple takes in.  My bad!
    watto_cobra
  • Reply 15 of 19
    flydogflydog Posts: 298member
    davgreg said:
    Soli said:
    People on these forums keep claiming that they receive better deals for an across-the-board cash back on their current card but I haven't seen a single free card that offers a minimum of 2% back for Apple Pay-based payments.
    USAA gives me 0.0% APR. I do not need 2% back on a card charging 14.9% or greater.
    Maybe limit purchases to things you can afford? 
    watto_cobrasuperkloton
  • Reply 16 of 19
    matrix077matrix077 Posts: 719member
    davgreg said:

    There is no way I would pay the usurious rates common to credit cards- especially to anything related to Goldman - for some cash back scheme. Tell them to keep the cash back and lower the interest rate. The rates Apple and Goldman will be charging used to be the kind available from loan sharks.
    I have never paid credit card interest in my entire life. Zero dollar paid, so I have no idea what you’re worrying about. 
    edited July 11 watto_cobrasuperkloton
  • Reply 17 of 19
    SEISUISEISUI Posts: 1member
    Soli said:
    People on these forums keep claiming that they receive better deals for an across-the-board cash back on their current card but I haven't seen a single free card that offers a minimum of 2% back for Apple Pay-based payments.
    CitiBank Double Cash, 2% CB on every purchase regardless how you pay. 
  • Reply 18 of 19
    SoliSoli Posts: 8,975member
    SEISUI said:
    Soli said:
    People on these forums keep claiming that they receive better deals for an across-the-board cash back on their current card but I haven't seen a single free card that offers a minimum of 2% back for Apple Pay-based payments.
    CitiBank Double Cash, 2% CB on every purchase regardless how you pay. 
    Again, that's not better than 2% for Apple Pay purchases as a minimum for the Apple Card. The common statement is they "better than 2%."

    You could argue that it's slightly better since it's also for the less secure physical card-based purchases whereas the Apple Card is pushing their secure Apple Pay system, but it would ignore the Apple Card's inartistic benefit of paying you daily as opposed to CitiBank going the complete opposite direction from the traditional card of giving you rewards at the end of the bill cycle by making you wait until you pay your bill before you get the other half of your rewards. You could argue that you pay your card balance off every week and that you never use Apple Pay. That's fine, but that also means the Apple Card isn't designed for you. This is a card designed to help promote the higher security of Apple Pay and I, for one, think this is overdue. Personally, I wish the card issues would've given retailers a slight drop in their card fees for Apple Pay (and other *Pay systems that are piggybacking Apple's system) so that retailers are keen to promote this more secure setup.
    edited July 11 watto_cobrasuperkloton
  • Reply 19 of 19
    nhtnht Posts: 4,487member
    Soli said:
    That's my plan and what I assume Apple expects. People on these forums keep claiming that they receive better deals for an across-the-board cash back on their current card but I haven't seen a single free card that offers a minimum of 2% back for Apple Pay-based payments.
    Er, …minimum of better than 2%…

    edit: Some come up to 2%, but even the most coveted cards only offer a higher kickback for select items when used with Apple Pay purchases. For example, The Amex Platinum is 1% for the minimum for Apple Pay but costs $550 per annum. If you're spending well over $11k per year for hotels and flights then that could be very beneficial since you get 5% back on those. Most would probably do better with an Amex Blue Cash Preferred card with 6% on supermarkets, 3% on gas with no annual fee. Or there is the Amex Cash magnet card which is 1.5% across the board and no annual fee, f you don't want to deal with the time and effort shuffling cards to maximize your return. For me, 2% with Apple Pay, which is now the majority of my purchases will be pretty good and will only cause me to consider killing one of my cards which is my current default card at 1.5% cash back.
    The advantage of AmEx Plat is access to lounges, $200 airline fees and paying for TSA Pre or CLEAR every couple years.  If you use all the benefits it's net cash gain.  If you don't then not so much.
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