By Titik Puspa 
Apple has officially launched its highly anticipated Apple Pay service in India, marking a significant expansion for the tech giant’s payment ecosystem into the world’s most populous nation. The rollout, which began on Tuesday, sees Apple’s first banking partner as Axis Bank, the country’s third-largest private-sector lender. This move, long anticipated and subject to several delays, enters a fiercely competitive market that has been overwhelmingly shaped by the success of the state-backed Unified Payments Interface (UPI). The arrival of Apple Pay signifies a new chapter in India’s rapidly evolving digital payments narrative, one where global technology giants are now vying for a share of a market accustomed to a unique, bank-to-bank transfer model.
The initial phase of Apple Pay’s deployment in India is notably constrained. At present, the service is compatible with eligible Axis Bank credit and debit cards issued on the Visa and Mastercard networks. Crucially, it does not yet support India’s indigenous card network, RuPay. This limitation immediately curtails the potential reach of Apple Pay, as RuPay is a dominant force in the Indian card payments landscape, particularly for domestic transactions. Furthermore, acceptance of Apple Pay will be restricted to merchants and point-of-sale (POS) terminals that have been specifically provisioned and enabled for the service. This means that while millions of merchants may eventually accept Apple Pay, the immediate availability will depend on individual businesses and their payment infrastructure providers.
Despite these initial limitations, Apple has expressed optimism about the service’s potential reach, stating it will be accepted by "millions of merchants" across India. Key partners in this rollout include prominent names in Indian e-commerce and retail, such as Blinkit, Croma, Ixigo, Reliance brands, Tata 1mg, and Zomato. To facilitate widespread adoption, Apple has collaborated with a robust network of payment service providers. This includes major players like Cashfree, JusPay, Mswipe, Paytm, PayU, Pine Labs, Razorpay, and Worldline. Their involvement is critical in integrating Apple Pay with existing payment gateways and merchant terminals, a complex undertaking given the diverse technological infrastructure present in the Indian market.
The fundamental difference between Apple Pay and India’s dominant Unified Payments Interface (UPI) system lies in their underlying architecture. UPI, launched by the National Payments Corporation of India (NPCI), enables instant, direct bank-to-bank transfers without the need for intermediaries like cards. This peer-to-peer and peer-to-merchant payment system has achieved remarkable penetration due to its simplicity, speed, and lack of transaction fees for consumers. Apple Pay, on the other hand, is fundamentally a card-based system. It relies on tokenization technology to securely store card credentials, allowing users to make contactless payments or online purchases without revealing their actual card numbers. This card-centric approach necessitates individual card issuers (banks) and payment infrastructure providers to integrate with Apple’s platform, a process that is inherently more complex and time-consuming than the unified API-driven approach of UPI.
Indeed, the commercial terms governing Apple Pay’s operation have emerged as a significant hurdle in negotiations with some of India’s largest financial institutions. Apple is reportedly seeking a transaction fee of approximately 20 basis points (0.2%) on each transaction. While this percentage may seem small, it represents a substantial portion of the existing margins within the payment processing layer, which typically ranges from 40 to 50 basis points (0.4% to 0.5%). This fee structure aligns with Apple’s global model, where it leverages its vast user base to extract value from transactions facilitated through its devices and services. However, in the Indian context, where transaction fees are generally lower and UPI has set a precedent for cost-effectiveness, this proposed fee has become a point of contention. As a result, major banks such as HDFC Bank, ICICI Bank, and SBI Card are not supporting Apple Pay at the initial launch. Negotiations over these commercial terms are ongoing, suggesting that their eventual participation may be contingent on reaching a mutually agreeable financial arrangement. The silence from Apple, Axis Bank, HDFC Bank, ICICI Bank, and SBI Card in response to requests for comment underscores the sensitive nature of these ongoing discussions.
The entry of Apple Pay into India occurs against a backdrop of a vastly different digital payments ecosystem compared to markets like the United States or Europe, where card-based transactions and associated fees are more established. India’s digital payment revolution has been predominantly fueled by UPI. This government-backed innovation has democratized digital payments, making it accessible to a vast population through a simple mobile application. The ubiquity of QR codes, allowing for instant payments directly from bank accounts, has become a cultural norm. In this environment, Apple Pay, with its reliance on cards, initially targets a more nascent segment of the market – the card-carrying populace.
However, Apple’s strategic positioning in India cannot be overlooked. The country boasts a rapidly growing base of iPhone users, a demographic that tends to be more affluent and more likely to possess premium credit cards. These users are often early adopters of new technologies and are accustomed to the convenience and security offered by services like Apple Pay in other markets. For banks, even with the dominance of UPI, the potential to engage with this high-value customer segment through Apple Pay could be a compelling proposition. The premium nature of iPhone users and their propensity to use credit cards for a variety of purchases could make Apple Pay a service that financial institutions find difficult to ignore, despite the existing competition.
Even if Apple Pay maintains a niche presence within the broader Indian payments landscape, the economic implications for Apple could still be significant. The transaction fees Apple levies represent a new revenue stream, providing another avenue for monetizing its burgeoning iPhone user base in India. As India’s economy continues to grow and its middle class expands, the number of affluent consumers with iPhones is set to increase, further solidifying the long-term potential of Apple Pay as a profitable service.
At its launch, eligible Axis Bank customers have the ability to add their credit cards to the Apple Wallet app. This enables them to utilize Apple Pay for both online purchases and contactless payments at supported terminals. The user experience, however, may vary during this initial rollout. A transaction could be successful at a terminal operated by an independent payment provider that has integrated with Apple Pay, but fail at another terminal whose acquiring bank has not yet enabled the service. This potential for uneven acceptance, even for users with supported cards, highlights the logistical challenges of integrating a new payment system into a fragmented market.
The introduction of Apple Pay is part of a broader strategic expansion by Apple in India. The company has been making significant strides in increasing iPhone sales, establishing local manufacturing capabilities, and expanding its retail presence. Counterpoint Research data indicates that Apple captured 28% of India’s smartphone market value in 2025, a notable increase from 23% the previous year, underscoring the growing demand for its premium devices in the country. Furthermore, India is becoming an increasingly vital hub for iPhone production, with approximately a quarter of global iPhones now manufactured in the country. Projections suggest this share could rise to between 30% and 35% within the next five years, according to reports citing Indian government officials. This escalating manufacturing presence and growing market share create a fertile ground for Apple to deepen its ecosystem engagement, with services like Apple Pay playing a crucial role in enhancing the overall Apple experience for Indian consumers. The success of Apple Pay will therefore be intricately linked to its ability to navigate the unique dynamics of the Indian payments market while leveraging the growing loyalty and purchasing power of its iPhone user base.
