It was recently reported that
have agreed to work together to develop a new payments system for
the iPhone. This comes on the heels of other reports indicating
have agreed to similar arrangements. The more recent report also
speculates that Apple will announce its new mobile wallet at its
upcoming September 9 event.
flickr/ Darwin Figueroa
While the particular details of the new system are anyone's
guess at this point, Apple could indeed become a powerhouse in
the payments business if things go well. And the credit card
companies fortunate enough to be involved could see a nice boost
to revenue as well.
Apple's payment system could be huge, but will it get
Between the iTunes and App Store platforms, Apple has about 800
million credit card numbers already on file. It would seem like a
natural next step to figure out a way to pay for non-Apple
products using the company's software.
It will likely use the iPhone's fingerprint scanner in some
capacity, and in order to be able to accept the mobile payments,
retailers are likely going to need to upgrade point-of-sale
terminals to be compatible with the NFC (near field
communication) chip reportedly built into the new iPhone.
It'll be interesting to see if Apple has agreements with any
retailers, which could be revealed during the product launch
event, and Apple could possibly incentivize retailers to use its
payment system by undercutting the fees merchants pay to
traditional credit card processors. One of the keys to success
here is consumers being able to make payments at a wide variety
of retail businesses, so its very important Apple gets this part
However, it looks like things are already heading in the right
direction. Apple's own retail stores already use terminals
equipped with NFC technology, and Visa and MasterCard have
already set a deadline of October 2015 for a switch from magnetic
stripe credit card technology to cards with integrated chips,
like are currently used in most of Europe. And once the chip
technology is up and running, integrating NFC technology would be
a relatively easy upgrade.
Who are the winners and losers here?
Aside from Apple itself, which stands to make a ton of money if
it can successful monetize its mobile payments system, the credit
card processors could see a substantial increase in charges (and
fee income) on both credit and debit cards for transactions that
otherwise would be paid in either cash or by another means.
One company that should be very worried by Apple's development
of a mobile wallet is
PayPal, which can be linked to a credit card but is also
generally linked to a user's bank account. As of now, PayPal is
seen as the leader in secure payment technology, and if Apple's
payment system allows for peer-to-peer payments in the same way
PayPal does, it could be very bad news for the company.
Will Apple succeed where others have failed?
The concept of a mobile wallet isn't that new.
and a bunch of mobile carriers have offered their own mobile
wallets for some time now, but none have really caught on too
Apple's unique opportunity is to be able to seamlessly
integrate the credit card data already on file into a software
platform that its users are already accustomed to using.
If the system is convenient, user-friendly, and secure, it
could certainly catch on. And, if retailers embrace NFC
technology and the system allows for peer-to-peer as well as
point-of-sale payments, this could indeed be revolutionary.
However, at this point there are a lot of unanswered
questions, which we'll hopefully receive some clarification on
during next week's Apple event.
In my opinion, investing a great deal of resources into
building a mobile payment system before the necessary
infrastructure is in place is very much a gamble. But then again,
so was making the iPad.
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Apple, Inc. May Be About To Revolutionize The Way
You Pay For Things
originally appeared on Fool.com.
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