The mobile payment solution Apple Pay is both the biggest risk and the greatest opportunity in Apple’s current ecosystem. Even though it has been a tough sell to consumers and retailers, the digital wallet has the potential to add a great deal of value to Apple (NASDAQ: AAPL).

Apple Pay’s rate of adoption has been very slow, even though the service was rolled out with much fanfare on October 20, 2014; it is only available in five countries: the United States, the United Kingdom, Canada, Australia and China. The app is not available in most parts of the world including the Eurozone.

To make matters worse, most of America’s largest retailers have refused to accept Apple Pay. The list of stores where Apple Pay is not welcome includes the world’s retailer; Walmart Stores Inc., and several gigantic US brands including the Kroger supermarkets, CVS Health drugstores and the Costco Wholesale clubs. A few US retailers; such as the discounter Target – even turned off features in their cash registers that would have allowed consumers to use Apple Pay.

An Investment in the Future

Consumers have also been rather reluctant to use Apple Pay. Only 20.5% of American iPhone owners with a device that works with Apple Pay had even tried the service – a year after its rollout, the payment security service Trustev discovered in a survey.

Nor is it being widely used, 56% of Apple Pay adopters said they only used it once a week, Tech Crunch reported. The major reason for that could be the small number of places where they can actually use the digital wallet. Another is that Apple Pay is often difficult to use; at Target discount stores and Exxon-Mobil gas stations customers have to access the solution through another app.

Naturally, many observers will be wondering why Apple has invested so much time and effort in this product. CEO Tim Cook even put his reputation on the line to introduce Apple Pay to the media. Cook took an even greater risk by refusing to help the FBI decrypt an iPhone – a move designed to protect Apple Pay’s security.

The answer is that Apple Pay might potentially generate a lot of revenue in the future. The app is more of an entry point to the financial services industry, a sort of iTunes for money; than an actual product. As with iTunes and the App store, Cook and company hope to lay the groundwork for a large service they can charge others to participate in.

Vast Potential for Apple Pay

What Cook is looking at here is the future market for Apple Pay. The data crunchers at Statista are predicting massive growth for mobile payment solutions over the next few years.

The volume of payment transactions sent through such services in 2015 was $8.71 billion. Statista predicts that number will more than triple to $27.05 billion in 2016, rise to $61.75 billion in 2017, increase to $114.63 billion in 2018 and hit $210.45 billion in 2019.

If Apple could charge a fee on transaction made through the system it could make a few billion dollars. Under the current business model, Apple hopes to make a small amount of money on each Apple Pay transaction by charging a tiny interchange fee.

PayPal Demonstrates Apple Pay’s Potential

The numbers from the oldest and best known provider of digital wallets – PayPal Holdings Inc. (NASDAQ: PYPL) lend credence to Statista’s rosy projections. The number of active PayPal users grew by six million during the fourth quarter of 2015, rising from 173 million to 179 million.

During the same period the volume of payments processed by PayPal increased by $19.74 billion, Statista reported. PayPal processed $69.74 billion in payments in third quarter 2015 and $81.52 billion in payments during the fourth quarter. Those numbers are reflected in PayPal’s bottom line; the company saw its revenues grow by $1.223 billion during 2015, rising from $8.025 billion to $9.248 billion.

The volume of payments processed through PayPal’s own social media payment solution; Venmo, increased by 174% during 2015, ZDNet reported. That’s astounding because Venmo can only be used to transfer money between individuals, and cannot be used to pay retailers. Some media reports indicate that PayPal is planning to add a retail transaction capability to Venmo.

Even if Apple could not make any money directly from Apple Pay, a secure and easy to use mobile payments solution would be a tremendous loss leader for the iPhone. Every digital wallet user is now a potential Apple customer. Many consumers might buy the iPhone simply so they could take advantage of Apple Pay – just as many people purchase Apple devices for access to iTunes.

Apple’s Reputation is the Real Value

More importantly Apple can counter rival digital payment solutions offered by Alphabet Inc. (NASDAQ: GOOG) and Samsung; in the form of Android Pay and Samsung Pay. It got to the market first and became the industry standard.

The potential market for Apple Pay is vast; even if actual use falls short of the Statista projections. Apple’s brand name and reputation alone should generate a high volume of usage for Apple Pay.

Therefore the value added to Apple Pay will not be seen for several years. Apple Pay is a risk, but it is also a shrewd and farsighted move on the part of the device maker. If it works out the payment solution could evolve into a tremendous marketing tool for the company at little cost. More importantly it will put Apple on the cutting edge of digital commerce, and position the company as the gateway to financial transactions.

Apple Pay could add value to Apple in the future, but only time will tell. For those who see Apple as a buy and hold investment, Apple Pay is an interesting opportunity for the future.