Apple made a big deal about its launch of Apple Pay. Expectations were through the roof as the iPhone maker was poised to revolutionize digital currency through customers’ phones. But that never happened. In fact, people hated Apple Pay. Apparently, Apple isn’t giving up, though. After seeing the wild popularity of PayPal subsidiary Braintree’s Venmo, a peer to peer payment system, Apple is giving it another go. Should Apple just give up already?
What’s Going to be Different About this Version of Apple Pay?
Entering the peer to peer money-transfer arena is most definitely not a short term play. In fact, most companies who enter the market tend to lose money. Fortunately, Apple has plenty of cash laying around. But even more important than cash, Apple has plenty of loyal customers laying around. And while that’s no guarantee of success, a loyal client base means that users will at least try whatever Apple puts out. For example, when Apple Pay was released, only 5% of users actually utilized Apple Pay within 20 months of its launch, even though a large chunk of Apple users tried the service.
Apple will need both the extra cash and the loyal customer base to get a new payment system off the ground and catch up to PayPal’s Venmo and also-popular option Square Cash. In addition to that, there is Chase QuickPay (which processed $28 billion in transfers in 2016 — more than Venmo’s $17.6 billion), as well as other bank systems. It’s a crowded playing field.
So why would Apple willingly enter a crowded market knowing it’ll bleed money?
Short answer? It’s worth it. In today’s digital age, money is digital, too. People use these systems to do everything from splitting dinner and drinks to paying rent. And while the process may seem like it’s not particularly profitable, the long term vision of the plan gets a young audience engaged in a very profitable market — finance. Whether it’s credit cards, financing options, or banking choices, peer-to-peer payment systems can be a huge funnel into a much more lucrative funnel. And for that, Apple is more than happy to pay.
Watch this video demo on how to use Apple pay from TechCrunch:
If Apple moves forward, expect shares to rise up as profits start to trickle in over time.
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