Wanna Know How Many Apple Pay Users There Are?

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Pop quiz to get your Friday morning up and running right. 

This week during Apple’s earnings, we learned which of the following about Apple Pay:

A- Essentially nothing

B- Oh right, Apple Pay, I was thinking about the Apple Watch

C- Enough to make a pretty good guess about how many potential Apple Pay users there are walking around the United States right now 

Since many of you are payments peeps, we imagine the odds are pretty good that very few of you answered B.

Apple Pay was one of a few topics analysts and industry watchers were hoping to get a glimpse of when Apple released its earnings yesterday. But we didn’t get many specifics. Luckily, we at PYMNTS broke out our green visors post earnings call and did some whiteboard math problems with what Apple did say — coupled with what we already know — and found we could in fact infer some new Apple Pay data.

Curious?  Check it out.

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Wanna know how many Apple Watches have been sold? So do a lot of people, but Apple is not saying. Unfortunately, for the purposes of reporting earnings, Apple Watch exists in the magical black box category of “other” where it hangs out with iPods, Beats accessories and Apple Pay. On the whole, “other” had a better than OK quarter; it brought in $2.6 billion. For comparison’s sake, Apple reported $1.7 billion in Q3 and $1.8 billion last year in Q3 2014. 

Tim Cook did point out one can’t simply just take the $900 million difference and assume it is all Apple Watch – and in fact even sort of implied that doing so could be underselling the Watch’s potential success.

“Sales of the Watch did exceed our expectations and they did so despite supply still trailing demand at the end of the quarter,” Cook noted. “And to give you a little additional insight, through the end of the quarter, in fact, the Apple Watch sell-through was higher than the comparable launch periods of the original iPhone or the original iPad. We only had 680 points of sale in the quarter for the Watch. Online sales were so great that we did not have inventory in our sales until June. And so those points of sale, pretty much the overwhelming majority of the low numbers of sales, were not there until the last two weeks of the quarter. As I look at all of these things, we feel really great.”

And the reason for the “mum’s the word” attitude is not because they have bad news, but they just don’t want the competition to get a leg up.  

“We made a decision back in September, several months ago, not to disclose the shipments on the Watch and that was not a matter of not being transparent, it was a matter of not giving our competition insight on a product that we’ve worked really hard on,” Cook noted during the call.   

And while news on the Watch was thin — aside from the expected affirmation of its awesomeness — news on Apple Pay, this year’s other splashiest new “other,” was practically non-existent.

Outside of the well-known news — the mention of the U.K. Apple Pay launch (and soon to add American Express’ corporate cards to Apple Pay) and the partnership with Square to enable access to its new EMV/NFC dongle that will enable Apple Pay — the mobile payments service didn’t factor into this quarter’s call.

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As Sean “Puff Daddy” Combs sang presciently in 1998, it’s all about the Benjamins (baby).

Apple posted another strong quarter with a profit of $10.7 billion (up $3 billion YOY) and revenue of $49.6 billion (up 33 percent YOY).

And so the market, with its normal clear-headed rationality, promptly gave Apple’s market cap a $66 billion haircut, because apparently only turning almost $11 billion in profit this quarter isn’t enough to impress anyone if you’re Apple. 

That haircut was putatively premised on the fact that Apple only sold 47.5 million iPhone 6’s last quarter, which is unfortunately less than the 48 million-50 million which analysts thought they would sell.

Apple, it bears noting, seems happier with this result than its investors. Tim Cook noted that Apple just had its best June quarter to date, pushed by the power of the newest the iPhone. The unit sales grew 35 percent, which Cook said was “almost three times the rate of growth of the smartphone market overall, and we gained share in all of our geographic segments.”

Particularly China, which Cook mentioned no fewer than 40 times during his earnings call.  

The other piece of iPhone trivia: Tim Cook is really, really happy at the number of iPhone users who have upgraded — and is excited to convert the rest of them.

“In terms of the percentage of customers that have upgraded to a 6 and 6 Plus versus that have not upgraded, it’s 73 percent,” Cook shared last night, “meaning that 27 percent of the installed base of customers prior to the launch of 6 and 6 Plus have now upgraded.”

Wait, what was that? Did Apple just give us a clue about the number of potential Apple Pay users?

Why yes, yes they did.  

Off to the Math Cave!

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OK, so 27 percent of Apple’s installed base is Apple Pay compatible in the U.S. right now. In May, ComScore’s data indicated that ~187 million Americans have a smartphone and that 43 percent of those phones are iPhones. Yes, we understand that just taking that number times .27 percent might be underestimating some of those new iPhone buyers, but we are making an assumption that using the numbers as of May will get us pretty close. 

So the number of total U.S. iPhones as of June would be 82.2 million.  

Multiply that by .27 to find out the total number of iPhone 6/6+ users.

That gets you to ~24 million Apple Pay compatible phones in the hands of U.S. users.  

Now we have our denominator.

Earlier this year, PYMNTS and InfoScout co-released figures that indicated that 85 percent of consumers who could use Apple Pay (iPhone 6 owners and in stores where Apple Pay could be used) haven’t yet given it a try. That means that 15 percent have.

So now multiply 24 million by .15.

And you get 3.6 million people who have used Apple Pay at least once.

That same InfoScout report indicated that 85 percent of these users say that they use Apple Pay “every chance they can OR every time they remember.” Those two things are constrained by (a) the number of places that Apple Pay can be used and (b) the number of times they remember.

So, best case scenario this time around about ~3 million users that use Apple Pay “every chance they get and/or every time they remember.”

As for those who use Apple Pay “whenever possible, without fail,” according to InfoScout that figure only clocks in at 5 percent. Which means the worst case – Apple Pay has about 1.2 million committed super-users (1.2 million is 5 percent of 24 million).

That doesn’t seem like a runaway train but maybe it beats, or maybe it doesn’t, the number of Apple Watch Users.

So we do know something after all about Apple Pay. Still not so much about the Watch.

But, we will soon know more. In just a little over a week, InfoScout and PYMNTS will be releasing our latest edition of Apple Pay’s use in the fields statistics at our annual celebration of all things retail: R2.  

Stay tuned. That news could get much better — or much worse — for Apple.  

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For more news on Apple Pay, click here.

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