Apple Pay is the new mobile payment competitor that has been gaining traction in the market. The tech giant recently added Costco to the list of retailers allowing customers to pay with the smartphone app.
Apple Pay Grows
According to Gene Munster, a Loup Ventures analyst, more than 31 per cent of iPhone users have used Apple Pay to make a purchase in the past year in comparison to 25 per cent last year. Munster’s estimates show that over 252 million users have installed Apple Pay in their smartphones and are actively using the service to pay for goods and services.
Although Apple hasn’t revealed the actual number of users on its payments service, CEO Tim Cook said in the recent earnings call that almost 1 billion transactions were carried out in the third quarter of 2018, almost three times higher than in the third quarter of 2017. Based on the yearly Apple Pay growth seen in the company reports, Munster predicts that transactions through the new app will grow up to 200 per cent over the next year.
During its recent earning call, Apple revealed that the number of banks which have adopted Apple Pay has grown to 4,900, as more and more institutions are supporting this feature around the globe. The app has added over 1,701 banks to its list since last December, resulting in a 370 per cent growth in Europe, 141 per cent in Asia and 55 per cent in North America.
Costco Becomes a Partner
The app has also been gaining popularity with retail giants like Costco which recently made the feature available to customers across 520 stores across U.S. The warehouse club has 750-odd stores around the world including U.S. and Canada. One notable holdout about Apple Pay’s expansion is Walmart, which the biggest retailer in the country. Costco, however, comes on No. 4 on the list, according to data from the National Retail Federation.
Costco says that it is also working on adding the payment feature to its gas stations across the country. After striking a deal with CVS and 7-Eleven, Costco has becoming Apple Pay’s latest major partner. According to analyst Rahul Chadha, from the research firm eMarketer, Apple has been very strategic in choosing partners for its new app. All chain retailers it is currently working with have one thing in common: they all have a customer base of shoppers who go to these stores regularly.
According to a leading news site in payment industry, PaymentsSource, Apple Pay could only work in Costco on one condition: if the Apple Pay user syncs a credit card to the app, it must be Visa since the company has an exclusive dead with Citigroup and Visa. According to Costco’s website, the Visa rule doesn’t just apply to Apple but also to mobile payment options from other companies like Samsung and Google.
Walmart on Holdout
But even with other retailers adopting the mobile payment method, Walmart is planning to follow suit. Walmart recently made a statement saying that it won’t be accepting any other mobile payment option but its own. Walmart has its own mobile app called Walmart Pay which is widely popular with its customers.
The retailer has also collaborated with other chain stores like CVS and 7-Eleven for the creation of its first mobile payment service called CurrentC. The service failed to take off and Walmart ended up launching its own payment system called Walmart Pay in December 2015. In 2016, the app was available to customers at all Walmart stores in U.S.
Walmart Pay is a convenient way for customers to pay for their goods that only requires them to open the app once they reach the checkout counter and scan the QR code and the amount is billed to their credit card. On the other hand, Apple Pay uses a contactless payment system where the user holds their cellphone to the side of a payment reader to complete the transaction. In both cases, customers can access the receipt through the app or their email inbox.
Walmart told MacRumors after Costco’s move that it is currently Walmart Pay as the exclusive mobile payment method and there will be no plans to change that in the future. Walmart isn’t the only retailer that has successfully launched its mobile payment system. Starbucks also has a similar platform which uses enticing features like a reward program to attract more users.