Apple Pay is going to be big -- but some forecasts are way too bullish

At BI Intelligence we’re very bullish on mobile payments. We forecast that US mobile payment volume will reach over $US800 billion by 2019. That’s one of the highest estimates in the industry.

But while we think Apple Pay will be a significant driver of mobile payment volume, some estimates are way too optimistic about the payments feature’s potential — at least in the next 5 years.

One estimate we looked at had Apple Pay at 14% of Apple’s Services revenue segment by the end of 2017. In a new research note, we explore what the implications of this estimate would be if it turned out to be accurate.

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Here are some of the key takeaways from the note:

  • Some estimates are over inflating Apple Pay’s significance, assuming the feature will account for far more spending volume than seems likely. One estimate in particular has Apple Pay growing to 14% of Apple Services revenue in 2017, or $US3.3 billion.
  • This estimate from Morgan Stanley implies that about $US2.2 trillion in purchase volume will be transacted through Apple Pay that year (different from Apple’s revenue cut). As a point of reference, global payment volume made on Visa’s network amounted to $US4.76 trillion in 2014.
  • Apple Pay will launch in just a few markets by the end of 2017, so we assume that the US will account for at least 50% of Apple Pay volume by that year. This means that US Apple Pay transactions would have to account for 1 in 5 US retail dollars spent. This seems unrealistically high.
  • As a point of reference, our in-store mobile payments forecast — which is inclusive of all mobile payment methods, including Apple Pay and CurrentC — has mobile payments reaching just under 7% of total US in-store retail volume in 2017. It is one of the most bullish mobile payments estimates in the industry.

For full access to all our charts, data, and analysis on the payments industry — including downloadable Excel files — sign up for a trial membership.

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