Apple's Payment Business is Undervalued
According to a report published by Evercore ISI analysts, investors have not placed enough importance on Apple's payment business. The report highlights positive feedback received from a conversation with an expert who previously developed payment products at Apple (NASDAQ: AAPL).
The analysts stated, "This conversation has reinforced our confidence in Apple's long-term growth potential in the fields of Apple Pay, B2C payments, and potential B2B payments."
The Core Position of Apple Pay
The analysts pointed out, "Apple Pay remains a focal point, and most of their actions in this area aim to increase the adoption rate of Apple Pay." This includes recent collaborations with companies to replace employee badges with Apple Pay, similar to how Apple previously partnered with transit service providers to replace transit cards with Apple Pay functionality.
Apple's B2C payment plans are mainly focused on "tap-to-pay," targeting small businesses and enabling them to turn iPhones into point-of-sale devices. Currently, Apple is working with companies like Stripe to provide a more comprehensive payment service for businesses. However, in the long run, experts believe that Apple might seek to handle the entire payment process internally.
The analysts noted, "Experts also mentioned that Apple might leverage its growing influence in the enterprise sector to gradually introduce B2B functions, rather than focusing solely on B2C."
Closing the Gap with Competitors
Evercore pointed out that Apple Pay lags behind PayPal (NASDAQ: PYPL) in the e-commerce sector. PayPal is widely accepted by over 70% of online retailers, while Apple Pay's acceptance rate is significantly lower. However, Apple's announcement of the "Buy Now, Pay Later" (BNPL) service may help bridge this gap, as many online retailers seek to offer a digital wallet and BNPL services within a single solution.
The investment firm concluded, "If Apple can narrow this gap, we believe a significant portion of its over a billion iPhone users would prefer to log in directly to Apple Pay for purchases, rather than re-entering payment information on each website."
