The escalating competition between Apple and traditional banks over the digital wallet space is gaining momentum. Apple Pay, introduced in 2014, now sees activation on 78% of iPhones in the U.S., challenging the banks by charging them fees for transactions and potentially eroding their customer relationships. While Apple’s revenue from Apple Pay is a growing segment, banks are not sitting idle; they are fighting back with their own innovations, such as tap-to-pay cards and a new digital wallet named ‘pays’ backed by seven major banks, aimed at streamlining online payments. Despite these efforts, the success of these bank-driven alternatives will depend on consumer adoption and merchant acceptance.
- Apple Pay’s adoption has increased, with activation on 78% of iPhones in the U.S.
- Banks are concerned about losing transaction fees and customer engagement to Apple.
- Apple charges banks a fee for every Apple Pay transaction, slightly reducing their earnings.
- Apple’s revenue from Apple Pay is growing, nearly doubling between 2020 and 2022.
- Banks have introduced their own technologies like tap-to-pay cards to compete.
- A new digital wallet called ‘pays’ is being developed by a consortium of major banks.
- ‘pays’ aims to rival Apple Pay and PayPal by simplifying the online checkout process.
- Consumer behavior and merchant acceptance are critical to the success of the banks’ digital wallet.
- Previous attempts by banks to launch digital wallets have faced challenges, including technology limitations and consumer habits.
- The struggle for dominance in digital payments is expected to continue until a few ‘super apps’ prevail.
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