Report sees plenty of upside for Apple with one of its services offerings

Apple's mobile payment service Apple Pay has plenty of upside ahead of it, according to a new report from Loup Ventures. The venture capital firm estimates that as of the fourth calendar quarter of 2018, 43% of the 900 million active iPhones in the world have enabled Apple Pay on their handsets. This is up from the 36% who had the feature up and running last September, and the 20% who had Apple Pay activated in December 2017.

The firm says that the addition of peer-to-peer payments (similar to PayPal) in Messages has motivated more iPhone users to enable Apple Pay. There are now 383 million Apple Pay users globally, according to Loup Ventures' calculations, up 21% from the third calendar quarter of 2018, and 135% higher year-over-year. Even though the firm believes that 21% of active iPhone units can be found in the states, only 12% of Apple Pay users are in the U.S. Because of its widespread use with public transportation in China, Japan, U.K., and Russia, 47% of international iPhone users have used Apple Pay compared to 24% in the U.S.

Loup Ventures expects Apple Pay to generate $988 million in revenue for Apple during calendar year 2019, reaching $4 billion by 2023. Apple CEO Tim Cook says that 1.8 billion Apple Pay transactions were rung up during the October-December 2018 period. That was double the number from the same time period a year earlier, but growth was down from the 300% year-over-year growth seen in the quarter ended in September 2018.

The VC firm also weighed in on the new Apple Mastercard that it is starting up with Wall Street powerhouse Goldman Sachs. The firm expects the Apple Card to start slowly, but by 2023 the card should generate $1.4 billion in revenue. And the report notes that this will be "high margin" revenue. As such, the Apple Card would add .4% to Apple's 2023 gross, and 1.8% to the firm's bottom line by that year.

The report also notes that Apple could earn .20% of the value of each Apple Card transaction. That compares to the .15% Apple earns from the value of each Apple Pay transaction. According to the Wall Street Journal, the Apple Card will offer a 2% cash back incentive and users will be able to track their balance and more through an updated Wallet app.