10 years later, Apple Pay is amazing — and about to change

🌈 Abstract

The article discusses the evolution and impact of Apple Pay, Apple's mobile payment system, over the past decade. It examines how Apple Pay has become ubiquitous and the challenges it now faces as regulators and competitors seek to open up the platform.

🙋 Q&A

[01] Apple Pay's Rise and Ubiquity

1. What were the key features and promises of Apple Pay when it was launched in 2014?

• Apple Pay allowed users to save their credit card information on their phones and make payments with a single tap using NFC technology.
• It was touted as a feature that would "change the way you pay" and was a key selling point for the Apple Watch.

2. How widespread has Apple Pay become over the past decade?

• Apple Pay is now accepted at over 85% of retailers in the US.
• In April 2023, an estimated 55.8 million Americans made in-store payments using Apple Pay.
• It can be used on a variety of Apple devices, including phones, watches, computers, and more.

3. How has Apple controlled and locked down the Apple Pay ecosystem?

• Other developers have not been able to access the tap-to-pay NFC features, forcing them to add cards to the Apple Wallet and pay a 0.15% fee per transaction.
• Users cannot change the default app that appears when double-tapping the power button, preventing competition with Apple Wallet.

[02] Regulatory and Competitive Challenges

1. What are the key arguments around Apple's restrictions on Apple Pay?

• Apple claims the restrictions are for security and privacy, but critics argue they are about processing fees and platform lock-in.
• The US government's antitrust case against Apple cited Apple Pay as a core tenet, arguing that Apple blocks partners from developing better payment products.

2. How is Apple responding to regulatory pressure to open up Apple Pay?

• Starting with iOS 18.1, Apple will allow third-party developers to enable tap-to-pay transactions in their own apps.
• Users will also be able to set a default app for contactless payments and change the double-click power button behavior.

3. What are the potential implications of opening up Apple Pay's NFC access?

• It could enable "tap-to-everything" functionality, allowing users to use their phones for a wide range of digital keys, IDs, tickets, and more.
• However, there are concerns that it could lead to a fragmented ecosystem with poor user experience and security issues.

[03] The Future of Apple Pay and Apple's Control

1. What are the key questions surrounding Apple's tight control of Apple Pay?

• Was Apple's control about preserving user experience and quality, or was it about making devices harder to quit?
• As Apple is pressured to open up, the question is whether its legendary control was truly about user benefits or just platform lock-in.

2. How does the future of Apple Pay represent a test case for Apple's approach?

• The changes to Apple Pay represent a significant shift in Apple's traditionally tight control over its ecosystem.
• The outcome will shed light on whether Apple's control was truly about user experience or just about maintaining its own power and profits.