Apple Extends Mobile Wallet Foray to Canada, Australia

Apple Beats Q4 Estimates, Sells 48 Million iPhones
  • Company joins with American Express to expand Apple Pay
  • Spain, Singapore and Hong Kong to follow next year, Cook says

Apple Inc. is joining with American Express Co. to bring its mobile wallet system to Canada and Australia in the latest test of the technology giant’s mission to expand in the global payments industry.

Starting this year, the two countries will join the U.S. and U.K. in getting Apple Pay, which lets iPhone users make purchases by tapping their phones on merchant terminals, Chief Executive Officer Tim Cook said during a conference call Tuesday. Spain, Singapore and Hong Kong will follow in 2016, he said.

Compared with the U.S., Canada has a higher proportion of payment terminals equipped with the contactless technology used by Apple Pay. Currently, mobile-wallet transactions are limited to Android and BlackBerry devices, leaving out the 40 percent of Canadians who have an iPhone, according to ComScore Inc.

Apple Pay will have a “meaningful role, but hardly a transformational one in Canada,” Rob Sedran, a CIBC World Markets bank analyst, wrote in an Oct. 21 note. Average credit-card fees made up 2.9 percent of revenue in the last four quarters for Canada’s six-biggest banks, Sedran said. Assuming Apple captures 10 basis points per transaction, of roughly 150 basis points, and a 30 percent share of card transactions, the earnings impact would be immaterial for the sector in the near to medium term, he said.

Cormark Securities Inc. analyst Meny Grauman said in July that Apple’s entrance probably won’t hurt earnings at Canadian banks, even if it captures a quarter of the country’s payments volume. The top six banks would see annual profit slip by less than 1 percent if Apple grows to 25 percent of the market and charges interchange fees of 15 basis points, Grauman said.

Canada’s largest banks and wireless carriers have already developed mobile wallets for non-iPhone users. Toronto Dominion Bank’s UGO has signed up more than 100,000 users since debuting in December and Suretap, developed by Rogers Communications Inc., has 180,000. Both apps allow users to store loyalty cards as well as make payments.

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