Why 2016 May Be A Breakout Year For Apple Inc. (NASDAQ:AAPL)’s Apple Pay


Analysts are anticipating that more consumer payments will shift to mobile in 2016, thus benefiting mobile payments services such as Apple Inc. (NASDAQ:AAPL)’s Apple Pay. Particularly for Apple Pay, the backing by Starbucks Corporation (NASDAQ:SBUX) is expected to be a major boost. However, there are still numerous obstacles for Apple to overcome in the mobile payments space as competition intensifies.

By 2016, analysts expect to see a significant percentage of consumers spending happening over mobile devices. Convenience, security and personalization are some of the catalysts expected to accelerate adoption of mobile payments in the coming years. Additionally, payments insiders expect more merchants to implement loyalty programs for mobile payments, thus adding to the appeal of services such as Apple Pay.

Starbucks support

Starbucks has announced plans to roll out Apple Inc. (NASDAQ:AAPL)’s Apple Pay at all its U.S. stores next year. Apple’s executives are already highlighting the backing by Starbucks as a sign of greater things to come. According to Apple’s CEO, Tim Cook, Apple Pay transactions increase by double digits every month.

What’s holding back Apple Pay?

Some of the challenges that have held back wider consumer adoption of Apple Pay include shortage of store terminals that support the service. Apple Pay uses the more secure channel called near-field communications (NFC) technology. Merchants that don’t already have NFC-enabled terminals have to upgrade their systems to accept Apple Pay, and many haven’t done it, thus limiting access to Apple Pay services. However, Apple Inc. (NASDAQ:AAPL) has entered into some partnerships to make it easier for vendors to acquire compatible readers to upgrade their systems to allow Apple Pay transactions.

Upgrades in the U.S. by retailers to terminals to support EMV terminals have begun. As of October 1st, retailers face increased fraud liability if they have not shifted to the new terminals. While EMV terminals can be contact and contact-less, the need to upgrade to more advanced terminals could spur more support for Apple Pay.

Apple Inc. (NASDAQ:AAPL) will also need to get more people upgrading to Apple Pay eligible devices such as iPhone 6 and iPhone 6S series to trigger more adoption of the payments service.

With some of the founding members of the rival service CurrentC turning to Apple Pay and more stores updating their terminals to supper it, 2016 could truly be a breakout year for the mobile payments service.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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