Apple is en route to bringing their Apple Pay service to India. However, they’re facing what can only be described as a “bit of a crisis”.
What is the big problem you ask? Well, if I were to sum up in simpler words it would be that Apple Pay is too bougie for us Indians. But if you want an in-depth explanation, read on!
Globally, Apple Pay makes money by charging banks a small percentage fee on each transaction. This works well in countries where card payments are common and such fees are already part of the system. However, this approach doesn’t particularly suit India because we like free and cheap things, if I may say so myself.
In India, most digital transactions run through Unified Payments Interface (UPI). The key feature of UPI is that it charges zero fees for users and merchants. In fact, the free of cost transactions aspect was a big catalyst for its popularity across the country and resulted in its wide adoption by people and businesses of all shapes and sizes.
UPI processes roughly 20 billions of payments every month, supported by infrastructure that prioritises accessibility and scale. Even credit card transactions in India operate at around 5 basis points as opposed to Apple Pay where standard pricing circles around 15-20 points.
So why would anyone opt for Apple Pay which would offer similar services only at a much higher cost? A case can be made that Apple fanatics will do anything to get further into the ecosystem—to be subsumed into it and be one with it—even if it costs more. However, that demographic is quite low in number compared to the rest of the country and it would be a huge loss for Apple Pay if they let the latter go.
This issue seems more like a deadlock – Apple wants to earn a cut from transactions, but Indian banks and payment systems are built around minimal or zero fees. Because of this, banks are hesitant to agree to Apple’s terms, making it difficult for Apple Pay to launch smoothly. Additionally, Apple Pay is more optimised for card-based payments, while India is heavily oriented toward direct bank transfers via UPI.
Apple also faces stiff competition from well-established UPI-based apps that are already thriving in the Indian market. No matter how flashy Apple’s offers might be, unless they are offering money to us in return for making a transaction every time, it won’t be comparable to what’s already available in the country.
In simple terms, Apple is trying to enter a market where digital payments are expected to be free, which challenges their traditional moneymaking ways and insatiable greed. To succeed here, they will likely need to rethink their strategy—either by reducing fees, adapting to the UPI system, or finding other ways to generate revenue. For now it is pretty much a take it or leave it situation for the tech giant. Let’s see how things fare for them in this herculean endeavour of getting Indians to pay for things that are already available for free.
