Apple Pay
Apple therefore faces a classic network problem: The service becomes more useful with every additional bank, card network and merchant that joins it. Apple Pay has finally come to India, more than a decade after its global debut. But it is arriving in a payments market vastly different from the one in which Apple originally built the service. For now, an iPhone user who does not have an eligible Axis Bank card cannot use Apple Pay. RuPay is not supported at launch either. By comparison, UPI lets consumers link accounts across a wide set of banks and use essentially the same payment method across millions of merchants. The company is looking to add more issuing banks over time, depending on their technical readiness and card portfolios. That expansion will matter more than the headline launch itself. If Apple Pay remains confined to a relatively narrow set of cards, it risks becoming a useful but niche feature. If major banks come on board quickly, the addressable base expands sharply. There is another important distinction. Apple Pay and UPI solve somewhat different problems. UPI turned bank accounts into an extraordinarily low-friction payment instrument and built acceptance without requiring merchants to install card terminals. Apple Pay, at least in its current Indian form, sits on top of the existing card ecosystem. It makes that ecosystem easier to use rather than bypassing it. That could leave room for both. A consumer may continue scanning a QR code for a small everyday purchase, use Apple Pay with a rewards credit card at a restaurant and choose Apple Pay during an online purchase where otherwise card details and authentication would have added extra steps. That is also why Apple Pay’s India opportunity may be strongest in categories where cards already have a meaningful role — organised retail, travel, food delivery, fashion, hotels and higher-value purchases — rather than in the small-ticket transactions where UPI has become almost instinctive. For Apple, that may be enough. Apple Pay does not have to become India’s biggest payment system to deepen the role of the iPhone and Apple Watch in a user’s daily life. It strengthens the broader Apple ecosystem by making another routine activity happen inside its devices and Wallet.
India had more than 124 million credit cards outstanding in August, with monthly spending of about Rs 2 lakh crore. Axis Bank alone had over 16 million cards, making it one of the country’s largest issuers. Apple’s challenge, therefore, is not to introduce mobile payments to India.
Apple Pay has launched initially with Axis Bank-issued Visa and Mastercard credit cards, allowing customers to add eligible cards to Apple Wallet and tap an iPhone or Apple Watch at a compatible NFC terminal, or use Apple Pay during checkout in supported apps and websites. India does not need convincing about paying with a phone. From a roadside tea stall to a supermarket checkout, QR codes and UPI have already made the smartphone a wallet. UPI accounts for the overwhelming majority of digital-payment transactions in the country. It is to convince a section of Indians that there is a better way to use their cards. That explains the deliberately narrow start. Other banks are expected to be added as partnerships and technical integrations fall into place. The starting pool is small compared with UPI. But that may not be the right comparison. Apple Pay does not need to replace the QR code at the neighbourhood store to establish a meaningful business in India. Credit-card usage has been rising alongside UPI. On the digital-commerce side, Apple Pay will be available on apps including Blinkit, Ixigo, MakeMyTrip, Zepto and Zomato. In other words, Apple is starting where its users are most likely to encounter the service rather than trying immediately to replicate UPI’s extraordinary ubiquity. The bigger question is how quickly that circle expands.
That market also overlaps neatly with Apple’s customer base. iPhones remain concentrated towards the premium end of India’s smartphone market, where users are more likely to own credit cards, transact at organised retail, travel frequently and shop online. For these users, Apple Pay is less another payments app and more a way of removing friction from an existing behaviour. A physical card no longer needs to come out of the wallet. In an app or on a website, users do not have to repeatedly enter card details. At a shop, payment can be authenticated on the device using Face ID, Touch ID or the passcode before tapping at an NFC-enabled terminal. The timing also matters. Apple is entering India after contactless card infrastructure has become far more widespread and consumers have grown accustomed to using their phones for everyday payments. That gives Apple Pay a more receptive market than it would have found a few years ago — even if the behaviour it is trying to tap remains very different from the QR-led payments habit built by UPI. Apple is initially taking Apple Pay to thousands of merchants across categories including food and beverage, travel, fashion and lifestyle. The merchant network includes Tata and Reliance brands, Chaayos, Interflora, Le15, Comet, House of Masaba and Apple Stores. The eventual test, then, is unlikely to be whether Apple Pay can beat UPI. It is whether Apple can make using a credit card through an iPhone or Apple Watch feel easier than pulling the card out itself. India has already embraced paying by phone. Apple’s job now is to persuade its users that, sometimes, tapping can be easier than scanning. You use AI every day. Now get your AI Quotient. Take the AIQ test.