In the roughly four years since Apple launched its mobile payments service, Apple Pay, the company has managed to convince just about every major bank and retailer to let customers use their bank accounts to pay for things quickly through iPhones and Apple Watches.
Today (Jan. 22), Apple announced that it has also signed up Taco Bell and Target—two years ago, Target said it had no plans to adopt Apple Pay— meaning that 74 of the top 100 US retailers by revenue now accept Apple’s digital payment. The company added pharmacy chain CVS, along with 7-Eleven, late last year. They joined other major US retailers that include Best Buy, Starbucks, McDonald’s, Walgreens, Costco, and Kohl’s. (Some of the biggest holdouts: Walmart and Home Depot.)
While there’s no way of knowing exactly how popular Apple Pay is with consumers—the company doesn’t break out user numbers or revenue it receives from those transactions—the ever-increasing number of retailers using the service suggests it’s growing in popularity. Apple Pay is also taking off outside the US, where regions like Europe and Japan have more widespread adoptions of contactless payments.
There are other signs of Apple Pay’s increasing popularity. During eBay’s latest earnings call in November, chief financial officer Scott Schenkel told investors:
We’re offering other payment alternatives that we haven’t in the past like Apple Pay. So Apple Pay, in a matter of weeks, if you’re on an iOS device, immediately jump to 12% check out, 12% of checkout volume if you’re on an Apple mobile device. And that’s quite remarkable.
And during Apple’s last earnings call, CEO Tim Cook said the company set a revenue record for Apple Pay in the last quarter, adding:
Apple Pay is… by far, the #1 mobile contactless payment service worldwide. Transaction volume tripled year-over-year, and to put that into perspective, Apple Pay generated significantly more transactions than even PayPal mobile with over 4x the growth rate.
In PayPal’s most recent earnings release, the company stated that 40% of its 2.5 billion payment transactions for the quarter were done over mobile, which means that Apple is seeing over 1 billion Apple Pay transactions each quarter, and that number is growing rapidly.
Apple includes revenue from Apple Pay in a line item called “Services,” which also includes revenue from sales of apps and games, Apple Music subscriptions, iCloud storage, and ad sales for the App Store. We don’t know how much of Apple’s services revenue comes from Apple Pay, but reports suggest that Apple receives a 0.15% cut of each payment.
We also don’t know the average transaction value on Apple Pay, but if over 1 billion transactions are happening every few months, even the tiny percentage Apple takes would add up to a sizable chunk of change. The entire services business generated nearly $10 billion for Apple in the last quarter alone.