Horace Dediu (of Asymco) points out a huge win for Apple Pay:
In September 2016 Apple Pay came to support the world’s largest public transit system. It happened through the integration with Japan’s FeliCa and gave Apple Pay access to 160 million daily transactions.
This integration, according to 9to5Mac, adds another two million payment terminals. A big win for Apple. Horace continues:
The amazing thing about this business is just how many sides there are to this market: merchants, users, Apple, banks, POS terminals, credit card companies, online payment systems, etc.
To see progress at all is surprising. Changing payment systems is extremely complicated due to the breadth and depth of infrastructure. There are already 5 million contactless acceptors in the US. But there are many more points of sale. There is a long tail distribution for these systems so saturation will take a very long time.
It's true there are many sides to getting this right, but Apple's managed all these parts near perfectly; and maybe most importantly, their timing was perfect. Apple announced Apple Pay in September, 2014. Around that same time, MasterCard and Visa announced that new rules which would shift liability to whichever entity, such as a bank or store, had the least secured technology. This was designed to force stores to upgrade to new chip-and-pin systems, which includes the necessary technology to contactless payments. As the iPhone 6 (which included the necessary NFC chip) adoption increases, so does the availability of the appropriate readers. Perfect timing.
On the same topic, I don't think Apple is doing enough to educate their consumers about how much more secure Apple Pay is than using a physical credit card (even chip-and-pin). I think this is a missed opportunity.
See this from Apple's original press release:
“Security and privacy is at the core of Apple Pay. When you’re using Apple Pay in a store, restaurant or other merchant, cashiers will no longer see your name, credit card number or security code, helping to reduce the potential for fraud,” said Eddy Cue, Apple’s senior vice president of Internet Software and Services. “Apple doesn’t collect your purchase history, so we don’t know what you bought, where you bought it or how much you paid for it. And if your iPhone is lost or stolen, you can use Find My iPhone to quickly suspend payments from that device.”
Apple Pay will change the way you pay. When you add a credit or debit card with Apple Pay, the actual card numbers are not stored on the device nor on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on your iPhone or Apple Watch. Each transaction is authorized with a one-time unique number using your Device Account Number and instead of using the security code from the back of your card, Apple Pay creates a dynamic security code to securely validate each transaction.
This attention to detail is to be applauded (even two and half years later).
Disclaimer: At the time of this writing, I own Apple stock.