“There are indeed plenty of reasons to worry that Apple may attempt to disrupt the payments ecosystem,” Bernstein analysts wrote in a research note, Quartz reports.
“While the tech company could, in theory, create its own network that runs outside the card systems, Bernstein argues that Apple still needs the card networks, which are ubiquitous and trusted,” Quartz adds.
The digital payments race is an immense opportunity, representing about $1 trillion in revenue around world. Visa and MasterCard process more than $14 trillion of payments each year and are still growing as more transactions go online, flow through apps, and as consumers in many parts of the world use cash less often.
Apple Pay makes money by taking a sliver of each transaction that runs through the device. Users can store their credit and debit cards on the wallet and use it to make contactless payments—beefed up with biometric security—through their phone’s near-field communication (NFC) tech. In the US, contactless payments are forecast to increase to $1.5 trillion in 2024, up from $178 billion this year, according to Juniper Research.