8 Predictions for the Future of Apple Pay

Apple Pay is currently only available in two countries. But Apple has plans to grow its payment service even further. Here are my predictions for how Apple Pay may develop. One underlying factor here is that I believe Apple launched Apple Pay not as a big new revenue stream, but as a way to sell more iPhones and iPads and tie you even further into the Apple ecosystem. Afterall, iPhone and iPad sales make up almost three quarters of Apple’s revenues.

1. Available in more countries in 2015
Probability: High

Apple Pay has launched in the US and recently in the UK. I’m certain Apple will announce more countries that it will launch in before the end of the year. There are already reports of Apple being in talks with banks from a number of different countries. My prediction for the next countries to launch are Canada, Australia and maybe somewhere in Western Europe.

2. Availability on web browsers
Probability: High

Currently, Apple Pay can only be integrated into a native app. However, a large number of apps still surface a mobile web browser for their checkout (though you might not notice it), even if the rest of the app is natively coded. This means these apps can’t currently add Apple Pay. Also, most m-commerce transactions still happen via a mobile browser rather than via an app.

If Apple were to enable Apple Pay for the mobile browser, that would give many more websites the opportunity to add Apple Pay without them needing to overhaul their apps and mobile websites. The web browser could detect whether you’re on a compatible Apple Pay device and you could then still authenticate that transaction simply using the TouchID.

3. Availability on MacBooks
Probability: Medium

When the last MacBook was launched, there were rumours it would include TouchID. This would make for easy and secure access to your laptop, in the same way it makes it easy to unlock your iPhone. It could have also been the enabler for offering Apple Pay on your laptop. Is this likely to happen? Presumably it’s not too hard for Apple to include a fingerprint reader and a secure element in its devices. But MacBook users likely do most of their e-commerce transactions over a browser, so this is likely only to come once Apple makes Apple Pay available via the browser (see prediction 2).

4. Availability on Android
Probability: Low

Apple Pay is embedded into the Apple operating system. But could Apple choose to offer it on non-Apple devices, particularly on Android devices? Apple could offer their Passbook/Wallet app for Android devices and consumers could load it with their card. Then, when shopping in an app (or on a browser — see prediction 2), they could use Apple Pay to complete the transaction. In theory, it could work: maybe it would initially be limited to phones with a secure element rather than rely on HCE. But the question I have is why would an Android user choose Apple Pay over Android Pay. The only compelling reason I could see is if a merchant has integrated Apple Pay but not Android Pay. This wouldn’t be surprising, especially given Apple users tend to spend more than Android users. But if it was offered on Android, then there would be very little compelling reason for me to shift to an iPhone.

5. Apple requiring all apps to accept Apple Pay
Probability: Low

Could Apple require any transactional app to integrate Apple Pay as an option? Perhaps. But Apple wouldn’t be getting the same margins as its in-app purchases. Apple takes 30% on every in-app purchase, whereas it only takes 0.15% on every Apple Pay transaction (and that is likely to be even less outside of the US). That means if Apple did require it, it’s almost certainly not doing it for the revenue. Maybe Apple would require it to help with the adoption and engagement with Apple Pay, but I don’t think it would force developers into this inconvenience.

6. P2P payments
Probability: Medium

Apple already has a patent for this. But it wouldn’t be the first time it’s registered a patent and then not launched the technology. I imagine P2P payments with Apple could work something along the lines of Airdrop: select a nearby friend, choose how much money to send them, and they then accept the transfer. It could then deposit it into your bank account in the same way P2P payments work with Square Cash and Facebook Messenger. This would make it super simple to pay friends back for a meal or taxi fare. It’s also a feature that would make me want an iPhone that little bit more — which is Apple’s ultimate aim.

One challenge in implementing this is the cost: every time one of these transactions happens, it goes through the card scheme rails and incurs a fee. Who would cover this cost? I can’t imagine an Apple Pay P2P service succeeding if the consumer pays. I don’t think Visa/Mastercard would give the service away for free, nor can I imagine Apple paying for it. So, for Apple to launch P2P payments, they may first need to convince the banks to suck up the cost or find an alternative way around the cost.

7. Link your bank account
Probability: Low

If you simplify Apple Pay down to its basics, it’s simply a place to securely store your card details for easy payment. When you use Apple Pay, your card details are provided to the merchant and they are then sent along the existing rails provided by the card schemes. If you provided your bank details to a merchant, they wouldn’t be able to request a payment from your bank account in the same way as they do with your card. This is because of the way the entire banking infrastructure is set up. There are some funky ways to get around this, but they’re not easy and there are some additional risk factors involved in the money not being immediately withdrawn from your bank account. I also don’t believe that many people really want to pay directly from their bank: most consumers are happy using a debit or credit card.

8. Apple Bank
Probability: Extremely Low

Could Apple be your next bank? It’s very unlikely it would do this. As I said before, Apple Pay is simply a place to store your card details. This is similar to Amazon Payments, where Amazon stores your card details to make your next purchase easier on its site or one of the other merchants offering its service. It would be a massive stretch for Apple to start accepting deposits and issuing cards, not to mention all the regulatory and compliance hurdles it would need to overcome. But if Apple ever did get into banking, I’m sure it would be the best banking experience you’ve ever had.