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Business Operations Business Models

How Does Apple Pay Make Money (Business and Revenue Model)

The Apple Pay business model

Apple Pay logo
Here’s what you should know:
  • What is Apple Pay, and how does Apple Pay work?
  • How does Apple Pay make money?
  • Instant Transfer Fees (using Apple Cash)
  • Interchange Fees
  • Apple Pay profit and revenue
  • What is the Apple Pay business and revenue model?
  • Apple Pay funding, net worth, and market cap
  • Apple Pay subsidiaries, acquisitions, and exits

How does Apple Pay make money and how is it free to use? Well, here is a full, in depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the Apple Pay business and revenue model, how much Apple Pay makes per year, and how Apple Pay works.

What is Apple Pay, and how does Apple Pay work?

Apple Pay is a mobile payment and digital wallet service offered by Apple that allows Apple users to make cashless and cardless payments in stores, online, and in apps.

Developed and released in 2014 by Apple Inc., Apple Pay now has more than 500 million users worldwide using its cashless payment service.

So, how does Apple Pay work? To get started with using Apple Pay, you can simply sign in to your Apple ID using your iPhone. Then, open your Apple Wallet and tap the “Plus” sign to add a debit and or credit card.

After you’re all set up, you can then start using Apple Pay to make purchases in stores, online, and in apps. Please note, that you do need a compatible iOS Apple device to use Apple Pay.

Some of Apple Pay’s competitors include PayPal, Cash App, Zelle, Venmo, Skrill, Transferwise, Google Pay, Western Union, and other payment services.

How does Apple Pay make money?

According to reports, Apple Pay has more than 500 million users worldwide using its cashless payment service. So how does Apple Pay make money off of all those users?

Below is a breakdown of how much money Apple Pay makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 2 ways of how Apple Pay makes money in 2022

Apple Pay has a revenue model that makes money in two (2) ways; instant transfer fees from Apple Cash and interchange fees.

#1. Instant Transfer Fees (using Apple Cash)

One of the ways Apple Pay makes money is through its Apple Cash peer to peer (P2P) transfer service.

Like most other P2P financial services, Apple only charges users a fee for instant transfers. While traditional transfers that take 1 to 3 business days to go from a users Apple Cash account to their bank account are free. You can see those fees below.

Apple Cash instant transfer fee:

  • a 1.5% fee per instant transfer (with a minimum fee of $0.25 and a maximum fee of $15)
Apple Cash instant transfer fee | Apple Pay Business Model | How Does Apple Pay Make Money | How Does Apple Pay Work
Source: Apple Cash

Note: Users can send and recieve up to $10,000 per transfer.

#2. Interchange Fees

Apple Pay also makes money off of the interchange fees they receive from debit and credit card issuers.

How does Apple Pay make money from interchange fees? It’s reported that Apple Pay makes money whenever an Apple Py user uses their debit or credit card (like a Visa, Mastercard, American Express, Discover, etc) through Apple Pay’s tap-to-pay service.

When this happens, debit and credit card issuers charge the merchant an interchange fee of the charge amount. Interchange fees vary by the card issuer. For example, Visa’s interchange fee is between 1.15% + $0.05 to 2.40% + $0.10 of the charge amount.

From that, the card issuers (like Visa or Mastercard) then share a percentage of their interchange fee revenue with Apple (Apple Pay).

It’s unclear what percentage Apple receives per card transaction. But according to reports, it’s believed to be around 0.15% of a credit card transaction and $0.05 per debit card transaction.

cashless payments using Apple Pay | Apple Pay Business Model | How Does Apple Pay Make Money | How Does Apple Pay Work
Source: Apple Pay

Apple Pay profit and revenue

In 2021, it’s reported Apple Pay generated $1+ billion in revenue. Just 0.27% of Apple Inc.’s $365.8 billion.

Note: Because Apple Inc., the developer of Apple Pay, is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Apple’s publicly released financial reports, including annual reports, through Apple’s investor section on their website.

What is the Apple Pay business and revenue model?

Apple Pay makes money through a few revenue models that they combine within their company, they are:

  • Fee for service (FFS) business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model

Apple Pay funding, net worth, and market cap

According to Apple’s Crunchbase profile, Apple, the developer of Apple Pay, has raised $6.2 billion over 7 rounds and has a market cap of $2.379 trillion as of July 2022.

Apple Pay subsidiaries, acquisitions, and exits

To date, Apple Inc., the developer of Apple Pay, has made a total of 127 acquisitions, 24 investments, 17 lead investments, and 12 successful exits.