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Apple is eyeing the launch of its payments service Apple Pay in India as early as next month, with Axis Bank likely to be its first banking partner. The iPhone maker is expected to initially enable Axis Bank credit cards on Apple Pay before adding more lenders to the service, Reuters reported, citing sources. Apple has also held discussions with HDFC Bank and ICICI Bank for the India rollout. However, the two banks are yet to agree on commercial terms with Apple. The US-based company plans to add lenders over time through direct, bank-by-bank deals, mirroring the phased rollout of Apple Pay in other markets. Questions sent to Apple remained unanswered at the time of publication. The story will be updated upon receiving a response. The launch would mark the culmination of Apple’s nearly decade-long effort to bring its payments service to India, one of the few major markets where Apple Pay is currently unavailable. Apple first indicated plans to launch the service in India in 2017. However, the rollout subsequently ran into regulatory and technical hurdles, including India’s data localisation requirements and challenges around integrating with UPI. Apple’s Card Payments Play Apple Pay allows users to make contactless payments using tokenised card details stored on their iPhones or Apple Watches. Transactions can be authenticated using Face ID, Touch ID, or a device passcode without opening a separate payments app. The RBI last year allowed alternative authentication mechanisms, including biometrics, for card payments. The regulatory change enabled services such as Apple Pay to authenticate transactions made using Indian bank cards through Face ID or Touch ID. Axis Bank is India’s fourth-largest credit card issuer, behind HDFC Bank, SBI Cards, and ICICI Bank. It had around 16.26 Mn active credit cards in circulation as of July. However, Apple Pay’s addressable user base will initially be limited to Apple device users with cards issued by participating banks. The service will also enter a digital payments market overwhelmingly dominated by UPI, which accounts for about 84% of the country’s digital payment volumes. UPI supports contactless transactions through UPI Tap & Pay, allowing users to tap NFC-enabled smartphones on compatible payment terminals. However, unlike Apple Pay’s expected card-based offering, UPI Tap & Pay processes transactions through the UPI network. Apple has also held discussions with major lenders and card networks like Mastercard and Visa for the launch of the service in India, but it has faced friction over the division of fees. The tech giant has reportedly sought a 15-20 bps share of the interchange fee on transactions processed through Apple Pay, while some banks have proposed a lower share of around 10 bps.
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