Apple unveiled its new 4-inch iPhone SE during an event on Monday, and the new device could provide a significant boost to Apple Pay in China.
Apple shipped 30 million 4-inch iPhones in 2015, which demonstrated a clear consumers demand for the smaller devices. The company's VP of product marketing, Greg Joswiak, said during the event that the majority of first-time buyers in China bought 4-inch devices. This is likely because those models are less expensive.
This is a good sign for Apple Pay in China, where the mobile wallet is already off to a strong start. More than three million cards were loaded onto Apple Pay within 72 hours of the service's February launch in the world's most populous nation, Joswiak said.
Moreover, this early adoption occurred while China did not have any smaller phones capable of handling payments through Apple Pay. The introduction of the iPhone SE, therefore, could give Chinese customers another reason to adopt the service.
Apple also already has a solid user base in China. The tech giant accounted for 20.1% of the nation's installed smartphone base in Q2 2015, up from 12.8% in the same period one year earlier.
And Apple Pay is tethered to UnionPay cards, which nearly have a monopoly in China's payment card market. In fact, 80% of China's credit and debit cards are eligible for Apple Pay, which provides an immense user base that Apple Pay can tap into as Chinese customers purchase the iPhone SE.
Apple's push to make Apple Pay succeed in China is in keeping with the ever-changing world of payments. The increasing adoption of mobile wallets has caused both tech and financial companies to evaluate their strategies. But what does that mean for the average consumer?
Evan Bakker and John Heggestuen, analysts at BI Intelligence, Business Insider's premium research service, have compiled a detailed report on the payments ecosystem that drills into the industry to explain how a broad range of transactions are processed, including prepaid and store cards, as well as revealing which types of companies are in the best and worst position to capitalize on the latest industry trends.
Here are some key takeaways from the report:
2016 will be a watershed year for the payments industry. Payments companies are improving security, expanding their mobile offerings, and building commerce capabilities that will give consumers a more compelling reason to make purchases using digital devices.
Payments is an extremely complex industry. To understand the next big digital opportunity lies, it's critical to understand how the traditional credit- and debit-processing chain works and what roles acquirers, processors, issuing banks, card networks, independent sales organizations, gateways, and software and hardware providers play.
Alternative technologies could disrupt the processing ecosystem. Devices ranging from refrigerators to smartwatches now feature payment capabilities, which will spur changes in consumer payment behaviors. Likewise, blockchain technology, the protocol that underlies Bitcoin, could one day change how consumer card payments are verified.
In full, the report:
Uncovers the key themes and trends affecting the payments industry in 2016 and beyond.
Gives a detailed description of the stakeholders involved in a payment transaction, along with hardware and software providers.
Offers diagrams and infographics explaining how card transactions are processed and which players are involved in each step.
Provides charts on our latest forecasts, key company growth, survey results, and more.
Analyzes the alternative technologies, including blockchain, which could further disrupt the ecosystem.
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