As Apple Pay rolls out Monday (Oct. 20), it will suffer from two holes in its card acceptance system: corporate cards and prepaid cards. Although those absences may be short-lived, it plays into a very slow initial run for the Apple mobile pay play. Piper Jaffray is projecting Apple Pay revenue of $118 million this year and $310 million next year, which is "less than one percent of Apple's estimated revenue of $180 billion" in its latest fiscal year, reported The Wall Street Journal.
Eddy Cue, Apple’s senior vice president in charge of Internet software and services, was quoted in the story saying that he expects the biggest share of early Apple Pay revenue to be from in-App (as opposed to in-store) purchases. That's for two reasons. First, the shortage of retailers initially supporting Apple Pay in-store, partially because of a lack of terminals that can accept NFC payments. Secondly, in theory, Apple Pay is actually easier for online purchases as it replaces the current need to create an account and register a payment card with a button click verified by biometrics.
Another factor slowing acceptance is the relatively small number of U.S. consumers who already own the newest iPhones (6 and 6 Plus) and have downloaded the Apple Pay software version. Older iPhones, even with the latest software, can't support Apple Pay transactions.
"We’re trying to do something that I think is a game changer and it requires a lot of people to play together," Cue said. "There’s a lot to do here and we have a lot of work to do, but it should be huge."
The story also stressed the lack of corporate and pre-paid cards, although it acknowledged that those holes are likely temporary.
"Corporate credit cards or prepaid cards aren’t accepted yet. Neither are retailers’ proprietary credit cards, so shoppers can’t use their Macy’s or Bloomingdale’s cards. That means customers might miss out on discounts tied to the store cards, while merchants relinquish revenue they receive from issuing banks. Macy’s spokesman Jim Sluzewski said he expects the Macy’s branded card to be added eventually. He said roughly half of Macy’s sales come from its proprietary card, which is also linked to its loyalty program," the story noted. "Store-branded cards are 'the big gaping hole in Apple Pay,' said Richard Crone, founder of Crone Consulting, a payments advisory firm, who estimates that merchants collect as much as 4 percent of each transaction with their proprietary cards."