Apple sharpens payments suite with security and acceptance enhancements

The news: Apple made two changes to its payments solutions to improve security measures and expand acceptance.

• Apple appears to have switched Apple Cash, its virtual debit card, over from Discover to Visa, per MacRumors. New Apple Cash cards display Visa logos, but it's unclear whether existing Discover Apple Cash cards will transition to Visa. Apple Cash, which is powered by Green Dot Bank, lets users spend money with their iPhones, Apple Watches, and iPads. Users can also send and receive funds via Messages.
• Apple also notified some Wallet users that it will use their Apple IDs, devices, and locations to develop fraud identification and prevention assessments, per 9to5Mac. It will also share assessments and transaction information with card networks to further strengthen fraud prevention. The features are initially rolling out for Visa users.

Why it’s worth watching: Apple’s latest enhancements address two key barriers to contactless payment adoption: acceptance and security. When asked what would make them more likely to use contactless payments more often, 29.1% of respondents said wider availability, and 24.7% said knowing that the transactions were safe and secure, per a 2021 Raydiant survey.

• Visa has a slightly higher US merchant acceptance rate than Discover. Switching networks means users will be able to use Apple Cash at more US locations, which can help boost Apple’s total payments volume. On a wider scale, we expect increased acceptance will help drive proximity mobile payments volume to hit $416.38 million in the US this year, per Insider Intelligence forecasts.
• Although mobile payments are quite safe, a security perception gap has hindered adoption. Adding more security layers might bring more users to Apple Pay and increase the wallet’s volume. The number of US Apple Pay users is expected to grow 8.7% year over year and hit 45.4 million in 2022, per our forecasts.

The bigger picture: Apple is reportedly developing an in-house financial services suite dubbed “Breakout.” The plan would minimize Apple’s reliance on financial partners over time, like Goldman Sachs and CoreCard for the Apple Card and Stripe and Adyen for Tap to Pay on iPhone.

Combined with Breakout, Apple’s recent Wallet and Apple Cash enhancements point to the tech giant’s ambitions to capture a larger share of the financial services market. The company is well positioned to do so thanks to its vast user base and strong brand loyalty, which can support adoption for future financial products.