There is little doubt that the iPhone remains a workhorse and a major moneymaker. apple (AAPL -1.80%)The device accounted for about 52% of the tech giant’s revenue over the past 12 months, similar to the same period last year. The popularity of the iPhone makes it difficult for other products and services to make a difference in the company.
That said, Apple has a low-key service that quietly and without much publicity has become one of the company’s fastest growing revenue streams.
how would you like to pay for it?
While most investors won’t even give Apple Pay a second thought, the iPhone’s digital payment method has gone from being relatively obscure when it was introduced in late 2014 to being essential to a growing number of iPhone users. became.
Think about it: Nearly 10% of iPhone users had enabled Apple Pay by 2016, according to a study provided by venture capital firm Loup Ventures. That percentage doubled in 2017 and 2018, and by 2020 activations increased to 50%. The need for touch-free payment methods during the pandemic has seen a spike in usage, with activations reaching 75% of his. Apple Pay Activate It’s not always used, but the trend is undeniable.
And Apple Pay is much more widely accepted than it was in its early days. When it was introduced, only about 3% of retailers had the necessary technology to accept contactless payments. Nearly 90% of US merchants now accept Apple Pay.
Perhaps more importantly, Apple Pay is the leading payment app for teens, PayPalAccording to Venmo of Piper Sandler‘s semi-annual Taking Stock with Teens Survey. This suggests that Apple Pay could get even bigger as members of Generation Z (the largest demographic to date) become the primary breadwinners.
move the needle? No chance of bloodshed.
So what does this mean for Apple from a revenue standpoint? One business is unlikely to have a significant impact on Apple, but the numbers are compelling nonetheless. Created by Apple Pay Billions Dollars in revenue for iPhone makers.
Apple’s total revenue has exceeded $387 billion in the last 12 months. The company hasn’t given specific details about his Apple Pay contribution, but Loup Ventures estimates that he will account for about 1% of the total, or $3.88 billion.
That’s not all. The US has long lagged behind other developed countries in contactless payments, but its overall adoption has reached a tipping point. This is thanks to pandemic-related safety protocols and increased consumer acceptance of touchless payments.
a larger portion of the growing pie
In the first quarter earnings report, visa (V -0.34%) revealed that “tap-to-pay penetration is approaching 20%, with even stronger growth in major metropolitan areas.” The company says he has over 25% penetration in a number of big cities, including Los Angeles, Miami, and Seattle. San Francisco, San Jose, and Oakland have him above 30%, and New York tops the list with his 45%. This suggests that touch-free payment adoption is growing across the board and that Apple is well positioned to reap the benefits.
Apple’s influence extends beyond the US Early last year, the company reported that it had a base of more than 1 billion active iPhones worldwide. Additionally, Apple Pay is supported in 73 countries and territories around the world, with a growing list each year.
The iPhone will remain Apple’s main breadwinner for the foreseeable future. That said, Apple Pay is just one piece of a big and growing puzzle that will help boost Apple’s stock price over the next few years.
Danny Vena has positions at Apple and PayPal Holdings and has the following options: Long $95 January 2024 call at PayPal Holdings. The Motley Fool has positions in and recommends Apple, PayPal Holdings and Visa. The Motley Fool recommends the following options: Apple’s March 2023 $120 Long Call and Apple’s March 2023 $130 Short Call. The Motley Fool’s U.S. headquarters has a disclosure policy.
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