Apple Pay transactions have grown at a rapid rate
In the previous part of the series, we discussed the drivers for Apple’s (AAPL) Services segment. In addition to the App Store and Apple Music, Apple Pay is turning out to be another promising product for the segment. Transactions on Apple Pay were up 500% on a year-over-year basis in September 2016. In fact, in September, Apple completed more Apple Pay transactions than in all of fiscal 2015.
Along with growing its transaction volume, Apple is also trying to increase the number of Apple Pay locations. Apple recently launched its Apple Pay service in a number of markets such as Japan (EWJ), Russia (RSX), and New Zealand. In the past, Apple has also partnered with prominent companies such as Starbucks (SBUX), ExxonMobil (XOM), and Best Buy (BBY) for its Apple Pay business.
Apple looking to leverage the fast-growing mobile payments market
Early this year, Apple also launched its Apple Pay service in China, which the company believes could be the biggest market for Apple Pay. Clearly, Apple is looking to leverage the fast growth potential of the mobile payments market.
The research company eMarketer estimates that the US mobile payment market could triple in 2016, growing from ~$8.7 billion in 2015 to $27.1 billion in 2016. According to eMarketer, mobile payments are “point-of-sale transactions that use mobile phones as a payment method, via tapping, waving, and similar functionality.” The above graph shows how this market could continue to grow at a healthy rate in the future.