everytime i use Apple Pay i cant stop thinking how good the UX is and how it has just silently wrapped the majority of card txs in the world today Apple earns ~ 0.15% every time you tap your phone/watch against a payment terminal. they don’t disclose the exact revenue figures and only publish them as part of their “Services Revenue” but its estimated to be around $30/b a year and growing year by year. It’s interesting to look at how they did it given most other attempts to replace Visa and Mastercard have failed. There were many attempts: - girocard in 🇩🇪 - pin in 🇳🇱 - eftpos in 🇦🇺 All of these went head to head with Visa and Mastercard and eventually had to face the harsh reality that it is close to impossible to rival the network effects of Visa and Mastercard. Visa and Mastercard have been built up over decades, work worldwide, comprise millions of merchants and tens of thousands of issuing banks. Where do you even start to compete with that value proposition? Apple realized this and instead decided to work *with* Visa and Mastercard. More precisely they inserted themselves between the user and their issuing bank. Before Apple Pay: User > issuing bank > visa > merchant bank After Apple Pay: User > apple pay > issuing bank > visa > merchant bank But why did Visa and Mastercard let Apple in on their juicy duopoly? The answer is simple: because Apple had something really interesting to bring to offer. In 2006 Apple released TouchID. With TouchID, Apple had a biometric sensor that allowed them to tie a device and active session to a unique user. This not only made iPhones more secure, it was also a really compelling feature for Visa/Mastercard to bring chargeback, fraud and theft numbers down for online payments. Around that time already online payment volumes started skyrocketing and millions of stolen card numbers were circulating on the darknet. fraudsters would make online payments using those stolen cards and sometimes users lied about their card having been stolen to get some products for free and in both cases the card shemes would foot the bill with TouchID (later FaceID) otoh every payment is cryptographically signed and guaranteed to be made by the rightful owner. Visa and Mastercard saw that they could save billions per year in chargebacks and reduced fraud cases and agreed to the partnership that would let Apple in. Moreover, Apple already had a large payment surface with its sprawling ecosytem of mobile apps. Developers were keen to integrate a 1-click payment option that increased their conversion rates. And around the same time, Apple announced the NFC chip enabled iPhones to trasmit data to payment terminals for in-store payments obviously not all banks agreed to participate from the get go as they had to forfeit some of their revenue to Apple. but it was enough for Apple to have a few partnerships to start. the benefits were so clear, and the UX so smooth that consumers were switching banks if their bank didn’t support it