Apple Intensifies Competition in Digital Wallet Space, Prompting Bank Countermeasures

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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