It was three years ago that Apple (NASDAQ:AAPL) launched Apple Pay for the first time. Using contactless readers and Touch ID, the mobile payment method was meant to make checkout easier and more secure.
When Apple Pay was first launched, it wasn't clear how much traction the mobile payment method would gain in the marketplace. But three years later, Apple Pay is gaining so much steam that it's starting to look like it could soon become nearly ubiquitous -- and this major endorsement from Wells Fargo (NYSE:WFC) will certainly help.
Wells Fargo goes all-out on Apple Pay
Wells Fargo announced Tuesday morning it is rolling out the ability for debit card customers to withdraw money at its ATMs using mobile near-field communication (NFC) technology. The technology supports Apple Pay and other mobile wallets that mimic Apple Pay, including Android Pay, Samsung Pay, and more.
Wells Fargo isn't holding back with its rollout of NFC-based mobile ATM transactions. The functionality is initially launching at 5,000 of the bank's ATMs across the U.S., but Wells Fargo has set "the goal of upgrading the rest of the company's more than 13,000 ATMs with the hardware by 2019," the company said in a press release on Tuesday.
To highlight the importance of its significant bet on NFC-based ATM withdrawals, Wells Fargo cited research by Forrester that said mobile payments volume in the U.S. will triple by 2021.
Wells Fargo's lead of Virtual Channels Jim Smith explained the company's strategy behind the move in a blog post:
Our customers are increasingly using their smartphones in many areas of their financial lives, from tracking account balances to buying food at the grocery store. By enabling mobile wallet users to access NFC-enabled ATMs, this is another example of how we can provide the services they need and be there for our customers wherever they are — at the ATM, branch, or online.
The bank, which is the largest in the U.S. measured by deposits, sets a strong precedent for banks and retailers to upgrade their ATM and point-of-sale technology to cater to increasingly mobile customers.
Apple Pay is setting the standard
As Apple pointed out in its most recent earnings call, Apple Pay is gaining some serious momentum. It accounts for an impressive 90% of NFC transactions on mobile devices globally, Apple CFO Luca Maestri said. Further, Apple Pay is gaining significant traction internationally, "where the infrastructure for mobile payments has developed faster than in the U.S.," Maestri explained. About 75% of Apple Pay transactions currently occur outside of the U.S.
Apple continues to aggressively raise the bar for Apple Pay, rolling out peer-to-peer payments this fall and the ability to authenticate payments on Apple Pay using the iPhone X's Face ID.
Though Apple doesn't say how much of the revenue in its services segment comes from Apple Pay, it's clear that it's becoming more important to Apple's business. In Apple's second fiscal quarter of 2017, management said transaction volume increased 450% year over year in the 12-month period ending at the end of Apple's second quarter.
With Wells Fargo committing to accepting NFC-based payments at virtually all of its ATMs, Apple Pay is getting an important endorsement that will help its adoption soar even higher.
Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.