Apple Inc. Pay Is The Apple Watch “Killer App” [Report]Author: Paul SheaLast Updated: May 5, 2015 Jeffries reckons that Apple Inc. (NASDAQ: AAPL) is onto a winner with the Apple Watch, but only if the company is able to get Apple Pay, the company’s payment processing service, to catch on among users. A new report issued by mobile payments analyst Jason Kupferberg, asserted that Apple Pay is “one of the most compelling killer apps for Apple Watch.”Jeffries put a $135 price target on Apple in the report, which was published on Monday May 4, and put a Hold rating on the Cupertino, California company. Sundeep Bajika, the Apple specialist at Jeffries said that the research firm expects the Apple Watch to become a “secure repository of electronic credentials” for Apple Pay an many other applications.Selling the Apple WatchThe Apple Watch could be used for everything from hotel room key replacements to enterprise access according to the Jeffries analysts, but they believe that the device will first benefit from its use a more secure payment system. The much maligned security features of credit and debit cards in the United States make for an opportunity for other services to compete with the major banks.The convenience and security of using Apple Pay on the Watch will make it the go to payment system for many Americans and with an increasing number of devices coming with an NFC chip, more and more people are now able to use the service. By 2016 the analysts estimate that 90% of the iPhone install base will be able to utilize Apple Pay.Mr. Bajikar said that, despite the positive aspects of the service, Apple Pay wasn’t likely to be a major revenue earner for Tim Cook and his team. Like the rest of Apple software development, Apple Pay will be most compelling as a reason to buy into the company’s hardware according to the Jeffries analyst.Driving services at CupertinoApple has not had a blistering success with Apple Pay thus far, but many analysts are hoping that the mobile money technology could be the source of huge revenues going forward. Tim Arcuri of Caowe & Co. wrote recently that he sees iPhone sales slowing in the years ahead. He wants Apple to supplement that lost revenue growth with Apple Pay and other services.There’s a lot of buzz around the Apple software and services business, but the company’s most recent earnings report cemented the firm’s reputation as a hardware concern that dabbles in software and services. The iPhone along accounted for around 69% of Apple business in the quarter.Apple may or may not be able to bring in real revenue from Apple Pay and services like it, but they will create a value proposition that could make wearing and owning the Apple Watch more worthwhile. The Watch is likely to create greater awareness of Apple Pay, just as Apple Pay should make the Watch more visible.Apple doesn’t make money from selling great software. It makes great software to sell hardware. Services like Apple Pay may be no different if the Jeffries analysts are to be believed.