Apple Pay made wallets digital, and it’s only the beginning

Apple turned your iPhone into your wallet one decade ago. Ten years on, and the company continues to extend the digitization of personal payments, with small-scale loans, car rentals, and everything else that used to occupy space in your pocket. 

In the face of regulatory pressure, the company recently agreed to open up some elements of its payment/wallet services. With that in mind, it is interesting to note some of the upcoming additions to the service that Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet, outlined in an extensive post to celebrate 10 years of Apple Pay.

In almost every case, those additions reflect wider support for third-party payments solutions, in particular those that provision similar deferred payment services to those briefly offered by Apple Pay Later. 

What’s coming next from Apple’s wallet replacement schemes

Apple Pay has probably managed to become the world’s most widely used mobile payment service. Apple claims it has “hundreds of millions” of consumers in 78 markets, and notes that it is supported at checkout across tens of millions of websites, apps, and physical stores.

With that in mind, the new feature additions the company is promising for its service are likely to have some impact, particularly as over 11,000 banks also support use of Apple Pay. With that context, it may in future be seen as highly significant that by introducing support for in-app short term credit, Apple is kick-starting a business in casual loans.

Apple’s list of future additions includes:

• Starting in iOS 18, Apple supports installment loans and payments. That means consumers can purchase items using short-term credit from Affirm and Klarna (US) and Monzo Flex and Klarna (UK) when they check out with Apple Pay online and in the app.
• Users in Canada will be able to use Klarna’s flexible payment options at checkout with Apple Pay online and in-app in the future.
• The company promises to introduce support to access installment payment options from eligible credit or debit cards when making online purchases with Apple Pay in the US with Citi, Synchrony, and across eligible, participating Apple Pay issuers with Fiserv; in Australia with ANZ; in Singapore with DBS; in Spain with CaixaBank; and in the UK with HSBC, NewDay, and Zilch, with more issuers to follow.
• US Apple Pay users can redeem rewards with eligible Discover credit cards when they check out with Apple Pay. Support for other issuers will follow.
• In some markets, Apple Pay is now also available when using third-party browsers so long as they offer support for WebSockets. 
• Adding cards has been improved with Tap to Provision, which lets users add a credit or debit card to Apple Wallet by tapping an eligible card to the back of their iPhone.
• Next year, customers in the US will also be able to see their PayPal balance when using their PayPal debit card in Apple Wallet.
• In a rare interview to mark the anniversary, Bailey also hinted at other future services, including an extension to the company’s digital car key service for car rental firms. “Being able to book a car rental, confirm your authentication and identity … you can imagine that a car rental company is going to issue you a digital key, and that key could be used to unlock and use a car,” she said.

The security thing

That Apple is being forced to open up aspects of its business may pose challenges along the way, principally around security and privacy when using these systems.

“We’re always looking for new ways to make using Apple Wallet convenient while delivering unparalleled security and peace of mind,” the Apple Pay chief said.

“We know how important it is for customers to feel secure and trust that their financial transactions are private when making a payment. That’s why we’re always working to safeguard consumers, while also enabling banks to have industry-low levels of fraud for Apple Pay transactions. And it’s also why Apple Pay was designed to protect users’ highly sensitive personal and financial information, like their card number, which is never shared with merchants. Our customers trust that when they use Apple Pay anywhere, they can have the peace of mind that their payments are protected.”

The company’s ability to provide a point of trust is a significant asset to any digital payments business, and the path toward that kind of card-free future is already peppered with illustrations of what’s at stake when even credible companies see security undermined. In London, UK, for example, public transport operator Transport for London (TfL) recently suffered an attack in which customer data, including payment and password details, may have been exfiltrated. That incident took elements of TfL’s operations offline for weeks.

The evolution of the digital wallet

Consumer confidence, high usage, and market-proven security mean Apple continues to extend the reach of the service, which opened up its last new market in September when iPhone users in Oman became able to switch on the service. Digital payments in that nation have been accelerating thanks to a push to them from the Central Bank of Oman. 

Meanwhile, Apple also continues to convert holdouts such as Home Depot and H-E-B, both of which finally introduced support for Apple Pay in the US over the last few weeks.

The move to digital everything has accelerated even as Apple Pay has progressed. Just a decade ago, US consumers were quite resistant to mobile payments, though engagement was far higher across the water in Europe.

However, Apple Pay’s release coincided with a major investment in mobile bandwidth across North America, and as that infrastructure rolled out, consumers began to vote with their fingers and use digital payments more.

But it’s not just payments. Recent data from PYMNTS Intelligence found that US consumers now engage in an average of 14 different digital payment-related activities every month, from bill payments to telehealth to ordering groceries or entertainment services. 

Of course, this engagement with digital payments for things we already do also sets the foundations for the emergence of additional digital-only services. 

With that in mind, any business leader should consider the extent to which habituation with digital process creates wider opportunity for digitization across product and services development and how your business works internally. “Networks will become the catalyst for growth, profits and scale because they have the power to connect stakeholders and simplify and monetize value exchange,” wrote PYMNTS contributor and Market Platform Dynamics CEO Karen Webster.

What next?

If you think about it, the move to digital payments, and the repercussions of doing it, make even more sense retrospectively. After all, when Apple set out to replace your wallet all those years ago, that replacement also meant the company’s products and services digitized the most personal parts of most people’s existence: identity, keys, payments, mass transit — even riding a bike. 

Today, with so much that can be defined as personal having become digitized, it is more vital than ever that Apple succeeds in its mission to protect user privacy and security while also offering the personal convenience of the digital wallet. At the same time, this also means that at a very core level, digital identity has been unleashed and fresh opportunity knocks, even as mobile banking remains a top three digital activity across most nations.

Next step? B2B payments, probably, given that banking regulation, antiquated internal ordering systems, and lack of service provision mean that in some markets just 30% of enterprise payments made are digital, even while 70% of transactions take place online. In other words, now that wallets are digital, there’s still plenty of room to innovate and grow.

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