Apple Enters Payments: Is Apple Pay the Answer for Mobile Payments?

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8 October 2014


Apple Pay has a good chance to be successful, but it’s not going to happen overnight. In the US, the keys to its success lie with the merchants, and Apple needs to develop a much stronger merchant proposition, particularly for in-store payments. Internationally, Apple may find it harder to negotiate with the issuers and will have to contend with the dominance of Android.

On September 9, 2014, Apple announced Apple Pay along with iPhone 6 and Apple Watch. Apple Pay is first available in the US, with international launch expected later. The announcement sparked a frenzy of discussions, in both private boardrooms and public forums, on what Apple Pay means for the industry.

The Celent report Apple Enters Payments: Is Apple Pay the Answer tor Mobile Payments? is our take on what Apple Pay is and how it works. The report uses Celent’s payments product evaluation framework to assess the likely success of Apple Pay and what it means for the industry.

“Apple Pay raises the bar for mobile payments in terms of consumer experience and security,” says Zilvinas Bareisis, a senior analyst with Celent’s Banking practice and author of the report. “However, given limited consumer reach and expected reluctance from the US merchants to switch on contactless acceptance in their stores, Apple Pay’s success is not guaranteed. Time will tell if Apple can ignite mobile payments and succeed where so many others failed, but this development is certainly impossible to ignore.”

This report contains 13 figures and one table. It concludes with recommendations for issuers and processors, and discusses Apple Pay’s impact on a number of important industry issues.