Apple Pay use is growing around the world, offering Apple an alternative stream of revenue as sales of physical technology like the iPhone slowed globally during the last year.
Payments made with Apple Pay currently make up 5% of global card transactions, and the mobile payment system is on track to account for 10% of global card transactions by 2025, according to researchers at Bernstein cited in a report by Quartz.
Apple Pay is part of the company’s services revenue, which reached a record high for the company of $12.7 billion for the first quarter of 2020. That quarter, Apple also delivered record-breaking revenue of $91.8 billion.
This revenue could give a boost to Apple as it faces slowing iPhone sales around the world and competes against companies like Huawei that offer cheaper options to consumers, especially in emerging markets like China and India.
Launched in October 2014, Apple Pay allows iPhone and Apple Watch users to pay in stores with their devices using credit or debit cards registered on Apple Pay. Apple also offers Apple Pay on its devices to pay for online transactions. Apple makes money from the mobile payment service by charging a small fee for each transaction.
Apple told Business Insider that Apple Pay is used at a rate of 15 billion transactions per year.
Last year, Apple and Goldman Sachs released the Apple Card, which encourages cardholders to use Apple Pay by giving 2% cash back when users make a purchase on the card using Apple Pay, but only 1% if they use the physical card.
Apple said that over 70% of merchants in the US accept Apple Pay, while that number jumps to 99% in Australia.
In addition to in-store payments, Apple said it is also expanding to provide Apple Pay as a method of payment for public transit, having already launched in New York and Portland, and coming to Washington, D.C. and Los Angeles this year.
While mobile payments are still struggling to gain traction in the US, more than 80% of consumers used mobile payments in China in 2018, according to research from Bain cited in a report by CNBC.
Apple faces competition in China from QR code-based mobile payment services from Chinese tech giants Alibaba and Tencent.
Apple Pay has also received criticism that by only allowing its devices’ NFC technology to be used for Apple Pay, Apple is unfairly stifling competition. European antitrust authorities have also raised concerns about Apple Pay, according to Reuters. Apple, in response to a request for comment from Business Insider, said that it prioritizes customer security and privacy and that allowing other payment processors to access NFC on its devices could create a risk for users.
But the latest Apple Pay projection from Bernstein is undoubtedly good news for Apple as it looks to define the next decade of its business.