Apple Expands In South America, Unveils Apple Pay In Brazil

Apple (NASDAQ:AAPL) rolled out its mobile payment platform Apple Pay in Brazil, making it the first South American market to get the service.

Reportedly, the company has entered into a 90-day exclusive launch partnership with Brazil’s largest private lender, Itaú Unibanco Holding.

The nearly 1.2 million VISA or MasterCard holders of Itaú having an iPhone 6 or later can make payments using iPhones or other Apple devices like iPad or Watch, which is accepted at a number of locations in Brazil.

As of the last reported quarter, the mobile payment and digital wallet service, launched by Apple in 2014, was available in 20 markets.

Shares of Apple have gained 19.2% in the past year, outperforming the S&P 500’s rally of 12.7%.

Growing Adoption of Apple Pay

Apple Pay’s integration with iPhones is helping it gain popularity. In the last reported quarter, its adoption increased 50% on a year-over-year basis among merchants. Moreover, global purchase volume more than tripled year over year in the quarter.

We note that Apple is diversifying its revenue streams. Of late, the company’s strategy has been to identify new revenue sources that can boost its Services business, which includes Apple Pay among others.

Notably, the segment witnessed an 18% year-over-year increase in revenues, higher than its flagship iPhone segment, which grew 13%.

We believe, the launch of peer-to-peer payment service Apple Pay Cash in the United States in December 2017 is a step toward that direction. Management mentioned on the last earnings call that Apple Pay Cash is off to a “terrific start” with “millions of people” already using the service.

Apple Inc. Revenue (TTM)

Apple Inc. Revenue (TTM) | Apple Inc. Quote

Intensifying Competition

In order to cash in on the growing smartphone payments market, we observe that tech companies are focusing on expanding or building their mobile payments platform.

Notably, the launch of Apple Pay in Brazil follows Alphabet’s (NASDAQ:GOOGL) Google Pay launch in the country a month back, while Samsung (KS:005930) Pay has been available in the country since 2016.

PayPal (NASDAQ:PYPL) and its Venmo app are already dominating the peer-to-peer, mobile-to-mobile payments market. Square’s (NYSE:SQ) Cash App is also a very popular money transfer application.

Moreover, Alphabet is set to launch an updated Google Pay Send platform in the coming months. Google Pay Send is similar to Apple Pay Cash.

We believe that in order to expand its foothold in the market, Apple should expand the service to other markets.

Apple carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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