Apple effectively discloses no data on its fintech business, forcing us to speculate on the size and substance of this franchise.
There are plenty of wacky numbers floating around as to Apple’s scale in FinTech, including one widely quoted data point Apple processes $6 trillion of payments volume annually (claiming to be more than Mastercard).
This $6 trillion data point is just silly.
It’s estimated that Apple “controlled” roughly $800 billion of payment flows in 2022.
Though far from the overly-hyped $6 trillion, it’s estimated that $800 billion of annual flows is still impressive and leaves no question that Apple is a key actor in the global FinTech industry.
Apple’s estimated total payment flows will grow to $3.2 trillion by 2030 and within this article, the scope of the Apple fintech ecosystem will be dissected and explain the approach to estimating its size.
Scope of the Apple Fintech Ecosystem, Its Range of Services, and Customers
Apple’s FinTech ecosystem spans various areas of the market, from consumers to merchants, as depicted in Figure 1.
While some of these touchpoints, such as the App Store, are established and profitable, others, such as Apple Pay Later, are still in the developmental stage and have recently faced delays.
Apple’s advantage in the fintech industry comes from its status as a major provider of mobile technology, application and content ecosystems, and a highly-regarded consumer brand, which allows them to offer a diverse range of payments and financial services to both consumers and businesses.
Size of the Apple Fintech Ecosystem
Figure 2 illustrates estimates the current and future payment flows within the Apple ecosystem. Additionally, it’s estimated that for 2022 Apple handles around $800 billion in payments volume.
It’s worth noting that Apple does not physically process transactions made through Apple Pay, as they are routed from merchants to card issuing banks through Visa or Mastercard, but it has access to the data of those transactions.
These payment flows are expected to increase to $3.2 trillion by 2030, with a compound annual growth rate of 19% from 2022.
This growth will be driven by services that are not yet available in the market. It showed the distribution of these estimated flows across the various touchpoints of the Apple ecosystem in Figure 3.
Apple Pay is the primary source of Apple’s FinTech flows and, despite Apple’s limited public disclosures on Apple Pay, it’s estimated that, in 2022, it accounted for more than $500 billion in transaction value along with around 30 billion transactions.
This represents a 3% penetration of total Visa/Mastercard consumer card value and 10-12% of Visa/Mastercard consumer card transactions in North America and Europe.
Some may consider this penetration rate to be low, however, it’s believed to be a significant achievement given the obstacles faced in different countries and payment scenarios.
Apple Pay is currently smaller than PayPal in terms of flow volume, but it has only been in the market for 8 years compared to PayPal’s 24 years.
Apple Pay has been successful both in-store and online, with stronger online performance in the US and stronger in-store performance in the UK and Europe.
Based on the analysis, it’s speculated that the UK may be Apple Pay’s most penetrated market.
In 2022, Apple introduced Apple Tap-to-Pay, a tightly controlled SoftPOS platform. This platform is offered through partnerships with merchant payment service providers, such as Stripe, Adyen, Chase and others.
There are high hopes for the growth of this platform and it’s expected to generate over $60 billion in flows by 2030.
Apple’s Fintech Operating Model
As depicted in Figure 5 below, Apple currently relies on several partners to provide its extensive range of FinTech services, such as Goldman Sachs, Green Dot, JP Morgan Chase, among others.
Visa and Mastercard have a vital role and a majority of Apple’s fintech flows currently run on their networks.
However, Apple will most likely expand its infrastructure to include more non-card, account-to-account payment rails in the future.
There has been much discussion about Apple’s plans to bring the operations of its FinTech ecosystem in-house in the future.
Indicators hint that this is already happening for some aspects of Apple Cash and Apple Pay Later, however, it’s not believed that Apple will take on all or most of the functions currently provided by partners.