Apple may have made millions on Apple Pay this season

Apple Pay payment processing online and in person, along with Apple Card, hit record US Black Friday spend

This Black Friday, spare a thought for the Apple Pay team. I’m sure they had hoped to grab a piece of the BNPL (Buy Now Pay Later) market this season with the delayed Apple Pay Later scheme.

Apple probably made millions, but could have made more

Announced at WWDC 2022 and anticipated for months, Apple Pay Later lets customers split a purchase into four equal payments over six weeks. They don’t need to pay interest or fees.

The new payment service was expected in iOS 16 but seems to have been delayed. Which means Apple missed the opportunity this season.

What’s the cost of that?

Nothing, I guess, as Apple can’t really be seen as losing money it hadn’t even started to make.

Not only that, but in the US, at least, Apple Pay will likely be seeing significant use – this has been a record season for online shopping, according to the latest Adobe data.

Thanksgiving 22 an inflection point for mobile

Adobe says mobile accounted for 55% of all sales made online in the US on Thanksgiving and expects the pattern to remain across the season.

With iPhones accounting for c.50% of the US smartphone market, it’s reasonable to think they’ll have been used for a lot of this shopping. That implies many will have used Apple Pay (or Apple Card) – and might have used Apple Pay Later. Adobe claims BNPL revenue increased 1.3% and anticipates spending will “ramp up with the big shopping days”.

“Mobile shopping had struggled to grow for many years, as consumers found the experience lacking compared to desktop,” said Vivek Pandya, lead analyst, Adobe Digital Insights.

“Thanksgiving this year has become an inflection point, where smartphones drove real growth and highlights how much these experiences have improved.”

Despite economic worries, people are shopping this season.

Adobe anticipates a record $5.29 billion in sales on Thanksgiving Day, up 2.9% on last year. Interestingly, mobile accounted for 55% of all sales made online in the US that day, up 8.3% on last year and a record since 2012. Likely confirming the iPhone’s status in America, Adobe says Apple’s AirPods are selling well.

A quick back of the envelope estimate

A quick back of the envelope estimate suggests Apple Pay payment processing should have generated millions for Apple this season. Consider this:

• Adobe expects Cyber Week (the 5 days from Thanksgiving Day through Cyber Monday) to generate $34.8 billion in online spend, up 2.8% YoY, for 16.3% share of the full Nov-Dec holiday season.
• Cyber Monday will remain the seasons and year’s biggest online shopping day at $11.2 billion, up 5.1% YoY.
• Black Friday is expected to bring in $9 billion by day’s end.

Now think on this. If just 20% of all that spending goes through Apple Pay (not unreasonable given the significance of smartphone sales this year) that’s going to mean millions falling into Apple’s coffers, even at the widely believed 0.15% fee we all think the company makes.

Ker-ching!

The Apple Pay team may be gratified that even in the absence of Apple Pay Later, the use of mobile this season means they will certainly slice a few dollars in payment processing fees from all that spending.

Now click this affiliate link and go snag yourself a Black Friday deal on Amazon. You deserve it. And so does your payment processing provider. Or for a more honest feeling way to support this little site, feel free to donate at Ko-Fi.

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