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Apple Launches Apple Pay in Germany, Boosts Global Footprint

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Apple (AAPL - Free Report) recently rolled out its mobile payment service Apple Pay in Germany, four months after the official announcement.

About 15 banks including Deutsche Bank are supported by the payment service and an additional nine banks are expected to be added in 2019. The service also supports integration with select credit cards and is accepted by a number of retailers in the country.

However, Apple is a late entrant to the German market compared to one of its rivals Alphabet’s (GOOGL - Free Report) Google, which launched its service Google Pay in June this year.

Apple Inc. Revenue (TTM)

Apple Inc. Revenue (TTM) | Apple Inc. Quote

Apple Pay’s Rise in the Payment Market

Apple Pay is banking on its popularity of being the number one mobile contactless payment service globally, per management. Additionally, its volume tripled year over year and generated more transactions than PayPal (PYPL - Free Report) Mobile.

Moreover, new merchants continue to accept the payment service including Neiman Marcus, in fourth-quarter 2018. Management stated that 71 of the top 100 merchants and 60% of all the U.S. retail locations currently support Apple Pay.

This apart, with its increasing adoption across regions like Asia-Pacific, Europe, Latin America and the Caribbean, the Middle East and North America, Apple Pay set a new revenue record in the last reported quarter.

Moreover, we expect Apple Pay’s adoption rate to increase as Apple recently launched student ID passes at several major U.S. universities. Further, the upcoming holiday season may also boost the usage of the payments service.

Intensifying Competition

In order to cash in on the growing digital payments market, we observe that tech companies are focusing on expanding or building their own mobile payments platform. Notably, digital payment volume is expected to reach 726 billion by 2020, per research by Capgemini and BNP Paribus.

Google found success with the recent launch of Google Pay after rebranding Android Pay and incorporating Google Wallet P2P services into it. The company is also expanding its presence in many markets especially India, which is expected to reach $1 trillion by 2023 from about $200 billion in 2018.

Moreover, the ongoing digitization has led other players like Facebook, Amazon (AMZN - Free Report) and PayPal to bolster their presence in the country. However, Paytm’s backing by Berkshire remains a concern for these companies.

PayPal also has a strong footprint in the global payments market with more than 55 million customers using its service in more than 200 markets. Moreover, the company’s expanding partnerships, with more than 35 global brands, will help it gain momentum in this rapidly growing market.

However, the payment platforms adoption may witness a slowdown in the near term due to expected decline in the smartphone shipments, per IDC.

Currently, Apple carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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