Apple Pay is expected to pose little threat to the major Canadian banks when it launches in the country, presumably later this year. Cormark Securities’ Meny Grauman asserts in a memo to investors that its impact will be “immaterial.”
How immaterial is “immaterial”? Grauman predicts that even if Apply Pay were to take 25 percent of the major banks’ total payments volume, they would only see a 0.23 percent decline in their annual profit. And that 25 percent share would itself be pretty impressive; Grauman cites ITG Market Research in asserting that Apple Pay has only taken about one percent of the US mobile payments market, where it launched almost a year ago.
While Apple certainly wants as much market share as it can attain for its mPayment platform, the perception of it as being unthreatening to Canadian banks could actually be good news for the company. It means that Canadian banks will feel little pressure to expend resources fighting the mPayment service when it does launch; and soon multiple mPayment platforms, including Samsung Pay and Android Pay, should also be in the ring to help distract the traditional banks’ competitive attentions.
Meanwhile, Apply Pay will have an opportunity to grow as consumers become more accustomed to mPayments. Grauman predicts that by 2019 Apple Pay will have 15 percent of mPayment market share in the US; in Canada, consumers are already used to NFC technology at the POS via their chip-enabled credit and debit cards, and so may adopt a similar smartphone-based system even more readily.
Still, the big banks are trying to get a leg up by releasing their own digital wallets and mPayment systems, and it’s anybody’s guess as to how these will fare against Apple Pay when it becomes available.