Q1: Will Apple Pay be a huge success with customers? Why and why not?
I think Apple Pay will be a huge success with consumers for the following reasons.
Large market with fast growth. According to Exhibit 3, the annual US retail
spending was projected to reach $4.7 trillion in 2014 and $5.6 trillion in 2019. Also,
e-commerce and mobile payments were expected to expand at a 5-year CAGR of 12%
and 22% respectively, taking up 12.3% of total retail spending in 2019○
1, with certain
categories such as in-store m-commerce reaching a 5-year CAGR of 56%.
Fragmented market and less intense competition. Many companies and start-ups
have offered in-store mobile payment and no clear winner has emerged. Apple’s
strong branding influence would help with its participation in the competition and a
fragmented market means that it would be relatively easier for Apple Pay to gain
market share.
Product differentiation. The synergies with its current products truly differentiated it
from its competitors – Apple Pay is built to be an integral part of the iPhone
experience and other wallets require users to install and open the app to pay”
Customer desired features: Apple studied current customer pain points when
developing Apple Pay. By making the payment easy, secure and safe, Apple Pay is
able to add value to its customers. At the same time, these features are favored by
merchants and banks as well, whose cooperation makes the promotion of Apple Pay
much easier.
Channel development: Apple adopted different approaches towards banks, payment
networks and merchants of different sizes according to their specific characteristics to
make the channel developing process more efficient and effective. Apple also
provided services and materials to help merchants understand Apple Pay better and
some retailers even adopted Apple Pay for their own specific use. Also, Apple Pay
took advantage of the surge in demand for new terminals caused by the new
regulation in October 2015.
reach $5603 billion, E-commerce and Mobile Payment were expected to reach $548
billion and $142 billion respectively. ($548 + $142)/ $5603 = 12.3%