On the Apple Pay Install Base

Researcher Craig Hettenbach issued a blue paper to investors on Tuesday, a copy of which was provided to AppleInsider, to analyze the effect Apple Pay may have on the mobile payments industry when it launches on the iPhone 6 and iPhone 6 Plus this month. Because Apple Pay is compatible with the existing infrastructure and Apple already has such a large install base of users, Hettenbach believes that the company will have no trouble gaining traction.

“By reducing fraud, improving data security, and increasing credit/debit volumes for issuers and networks, while protecting the value of the existing payments value chain, we believe Apple Pay has a high chance of success,” he wrote. “Apple's market share in the U.S., its exposure to a relatively affluent demographic, and the ease of use along with a unique form factor (Apple Watch) position Apple Pay as the player to beat in the mobile wallet space.”

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I'm super optimistic that Apple Pay will be disruptive, but one does have to remember that by “large install base of users” Hettenbach can only be referring to iPhone 6 owners as it's the only device Apple Pay is currently compatible with until the Apple Watch comes along and enables 5s, 5, and 5c owners to also use it. Apple has a good start with iPhone 6 sales looking at minimum, robust, but overwhelming “traction” will require unlocking credit cards for all those millions of 5s, 5 and 5c phones out there and the lock that does it is an expensive piece of computing jewelry with unknown demand.