Apple Inc. (AAPL) Creating Another Revenue Stream With Apple Pay

Apple Inc. (NASDAQ:AAPL) is set to unveil the much talked about Apple Pay, a platform that will allow iPhone users to pay for transactions at more than 220,000 stores. Wal-Mart Stores, Inc.(NYSE:WMT) will not be part of the initial Apple launch as only stores with machines able to read the Near-Field Communication signal will be able to use the new service.

Stand-off with Corporate Credit Cards

The new payment service will only work with recently launched iPhone 6 and iPhone 6 Plus. Apple has already signed up six of the biggest card issuers who account for 83% of the total cards transactions. Some of the major card companies that it has partnered with include Visa Inc. (NYSE:V), MasterCard Inc. (NYSE:MA) and American Express Company (NYSE:AXP).

Customers are set to miss out on discounts offered by corporate credit cards, such as those offered by Macy’s, Inc. (NYSE:M)’s and Bloomingdales as Apple Pay is not compatible with them.

Macy’s remains confident that its credit cards will be enjoined in Apple Pay service sooner than later. Apple Pay will only work with iPads when purchasing apps, but not for carrying out transactions on brick-and-mortar stores. Apple Pay pool is to be expanded next year when Apple unveils iWatch that will also feature the Near Field Communication aspect.

Encryption for Security

The use of a distinctive encrypted code on Apple Pay is set to take security of user’s personal data to another new level. Apple Inc. (NASDAQ:AAPL) had to make the advancement, to avert skepticism that people have had in the recent past in the wake of major retailers being hacked for customer’s personal data.

Apple Pay is set to offer Apple Inc. (NASDAQ:AAPL) another revenue stream as banks will pay the company a certain percentage of the fees charged for each transaction carried out by users. No additional costs will be incurred with the integration of the service with banks.

Piper Jaffray analyst, Gener Munster expects Apple to generate revenues of up to $118 million in 2015 with Apple Pay, an amount that could reach highs of $310 million in 2016. The biggest chunk according to Apple Inc. (NASDAQ:AAPL)’s executive, Eddy Cue, will come from transactions involving the purchase of apps in the initial days after launch.