Tech giant Apple Inc. is well positioned to take a bite out of the financial services market with its growing payments ecosystem, despite some recent product delays. Here are 4 charts that provide more detail on Apple’s fintech play.
Increasing presence
Apple is expected to continue expanding its fintech footprint. It has a number of benefits that should help. These benefits include consumer affinity, trust in the Apple brand, and an active device install base.
It is estimated that by 2022, Apple controlled about $800 billion in payment volumes (note that, for example, Apple does not literally process Apple Pay transactions as they flow from merchants to card-issuing banks via Visa/Mastercard; although Apple is in the corresponding flow of data) . These flows are expected to grow to $3.2 trillion ($3.2 trillion) by 2030, a compound annual growth rate of 19 percent from 2022. Note that a significant portion of this growth will come from off-market services Today.
Follow the flow
Apple Pay is the largest source of Apple’s fintech flows. Apple publishes little data about Apple Pay. But some time ago it was revealed that Apple Pay reached 1 billion transactions per month. It is estimated that Apple Pay is just under half of PayPal by volume of flows.
The second largest source of fintech flows is the payment volumes that Apple accepts as a merchant, including Apple’s own product/service sales channels (Apple stores, Apple.com and Apple’s music/TV/video channels) and the App Store. Interestingly, the App Store is Apple’s most lucrative fintech platform.
The volumes arising from Apple Card and Apple Cash are modest. Apple appears to be focused on building out its portfolio of consumer services, including Apple Pay Later (planned to launch in 2023), savings accounts (recently announced as an addition to the Goldman Sachs-issued Apple Card).
A distribution of estimated currents over the range of apple contact points can be seen below.
How the Apple fintech system evolved
Over the past decade, Apple has launched a number of financial services, starting with its digital Wallet app and the digital payment system Apple Pay. Apple Card, the company’s digital credit card launched in 2019, had nearly 7 million users as of early 2022, according to estimates.
Courtesy of the iPhone and Apple Watch, Apple has the advantage of a huge customer base. A stream of tailwinds is pushing Apple towards the fintech and payments market, including increased use of digital wallets. Factors such as the wider spread of merchants accepting QR codes and instant payment features, and a growing appetite from regulators to encourage competition against the Visa and Mastercard duopoly, also helped.
Please note that Apple relies on many partners today to enable its wide range of fintech services.
Services mettle
Apple, with its rich and expanding portfolio of unique fintech services, is a key player in the development of the global fintech industry. The transformation of the company into a services juggernaut often goes unnoticed by many, who still consider Apple a product company. Here are some numbers on how Apple’s services segment has grown and the healthy gross margins they have.
