Apple Pay Finally Launches in India, Facing UPI Dominance and Banking Hurdles

Apple officially commenced the rollout of its mobile payment service, Apple Pay, in India on Tuesday, marking a significant entry into the world’s most populous country. This long-anticipated launch, first reported by TechCrunch, follows years of delays for the tech giant in a market uniquely dominated by the state-backed Unified Payments Interface (UPI). The initial phase sees Axis Bank, India’s third-largest private-sector lender, as Apple Pay’s inaugural banking partner, enabling its eligible cardholders to utilize the service.

However, the initial deployment is notably restricted, indicating a cautious approach in a complex market. Apple Pay currently supports eligible Axis Bank credit and debit cards operating on the Visa and Mastercard networks. Crucially, it does not yet extend support to India’s indigenous RuPay network, which has been vigorously promoted by the government and is widely adopted across the country. Furthermore, acceptance of Apple Pay will be limited to specific merchants and payment terminals that have been explicitly enabled for the service, suggesting a fragmented user experience during this early stage.

The landscape Apple Pay enters is markedly different from the card-heavy economies of the United States and Europe. India’s digital payments revolution has been overwhelmingly spearheaded by the Unified Payments Interface (UPI). Developed by the National Payments Corporation of India (NPCI), UPI is a real-time payment system that facilitates instant bank-to-bank transfers without the need for traditional card networks. Consumers can link multiple bank accounts to a single UPI ID and make payments by scanning QR codes or entering virtual payment addresses (VPAs), a method that has become ubiquitous for transactions of all sizes, from street vendors to large retailers.

In stark contrast to UPI’s direct bank-to-bank model, Apple Pay operates as a card-based system. This architecture necessitates integration with individual card issuers and existing payment infrastructure providers, making a broad and seamless rollout inherently more intricate. This complexity is compounded by Apple’s commercial terms, which have emerged as a significant point of contention with some of India’s largest financial institutions.

Sources familiar with the matter indicate that Apple is seeking a fee of approximately 20 basis points (0.2%) on transactions processed through Apple Pay. This figure represents a substantial portion, roughly 40% to 50%, of the typical 40 to 50 basis points (0.4% to 0.5%) of margin available within the payment layer in India. While this fee structure aligns with Apple Pay’s commercial model in other international markets, it poses a considerable challenge to the profitability of Indian banks. Consequently, major lenders such as HDFC Bank, ICICI Bank, and SBI Card, which collectively command a significant share of India’s banking and credit card market, are not supporting Apple Pay at launch. Negotiations over these commercial terms are reportedly ongoing, highlighting the deep financial implications for these institutions.

Neither Apple nor its banking partners – Axis Bank, HDFC Bank, ICICI Bank, and SBI Card – provided official comments regarding the launch when contacted. The current rollout aligns with earlier reports, including one by Reuters earlier this month, which had indicated Apple’s preparations for an October launch in India, specifically mentioning Axis Bank credit cards as the starting point.

Despite the dominance of UPI and the challenges in the card payments sector, Apple Pay’s entry could find traction among India’s rapidly expanding base of iPhone users. This demographic tends to be more affluent and exhibits a higher propensity to use premium credit cards, making them an attractive segment for Apple’s service. The sheer size of this customer base, even if a niche within the broader Indian payments market, could ultimately make Apple Pay a service that major banks find difficult to ignore in the long run, irrespective of UPI’s widespread adoption.

From Apple’s perspective, even if Apple Pay initially remains a niche offering, the economics could still prove highly meaningful for the company. The transaction fees levied would provide an additional and recurring revenue stream, further monetizing its growing ecosystem and increasing iPhone user engagement in the country. This strategy aligns with Apple’s global push to expand its services revenue.

At the time of launch, eligible Axis Bank customers are able to seamlessly add their credit cards to the Apple Wallet app on their iPhones. This enables them to use Apple Pay for secure online purchases and for contactless payments at physical terminals that support the service. The user experience is designed for convenience and security, leveraging biometric authentication like Face ID or Touch ID, along with tokenization technology that encrypts card details, enhancing privacy.

However, the path to widespread acceptance is not without hurdles. An insider noted that an Apple Pay transaction might successfully process at a terminal operated by one independent payments provider that has enabled the service, yet fail at another terminal whose acquiring bank has not completed its integration. This potential for uneven acceptance is a significant challenge for the initial rollout, as it could lead to user frustration even among customers holding supported cards.

The introduction of Apple Pay is a strategic component of Apple’s broader and accelerating business expansion in India. The company has been aggressively growing its iPhone sales, establishing a significant local manufacturing presence, and expanding its retail footprint across the country. According to a report by Counterpoint Research, Apple commanded 28% of India’s smartphone market by value in 2025, a notable increase from 23% just a year prior, underscoring the rising preference for premium devices in the market. Furthermore, India has become a critical manufacturing hub for Apple, currently accounting for approximately a quarter of global iPhone production. This share is projected to grow substantially, potentially reaching 30% to 35% over the next five years, as reported by the Indian English daily Business Standard, citing an Indian government official. This comprehensive strategy indicates Apple’s long-term commitment to India, positioning Apple Pay as another key service to integrate and enhance its ecosystem within this pivotal growth market.