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Apple Could Steal The Payments Game, So Why Don’t They?

Apple, computer, Tim Cook, Payments, PayPal, TouchID, iOS

Apple have a goldmine of data and the reputation to boot, but why aren’t they moving in on payments yet?

The payments market has had a shake up recently, people are flocking towards new ideas and trying to convince customers that these new ways are really better than the already established plastic card and paper money. Some people are biting, converting to a life of mobile payments, NFC payments and the occasional transaction in cash; but for many, it’s a life that is comfortable and doesn’t need shaking up.

The former giants in the payments space, especially the digital payments space, have begun to crumble. It’s hard to defend PayPal when it’s clear it hasn’t been innovating enough, losing ground to fresh-faced start-ups like Square and Swipe. MasterCard and Visa have been hedging their bets on the NFC market, and the super-giant that is Google is only just managing to tread water in the dominated payments market.

But there’s one name missing from all of this. And it’s quite a big one. Apple.

Where is Apple? What is it doing? And why hasn’t it entered the market?

After all, it’s more than big enough to finance and sustain the slow growth that is needed to enter such a frantic market. Just look at Google, it’s taken them years to reach the not-so-lofty heights that Wallet currently sits at.

Tim Cook, Apple CEO, has made a couple of cheeky nods towards the “big opportunity” that the payments market presents, especially via the immense amount of mobile commerce that passes through iOS devices currently. But he’s expressed no concrete plans to enter the space.

When you judge what Apple has at its disposal, it could certainly change the market overnight. Already it has millions of actively-engaged Apple consumers at its fingertips, tapping away at apps purchased from the App Store while listening to music purchased directly from iTunes Store. Its customers are eating right out of Tim Cook’s hand.

The frameworks for a mobile payments system is already there too, it just needs to be tied together in a neat package. Passbook is waiting to be loaded with payments cards, not just vouchers, loyalty cards, and eTickets. iPhone 5′s TouchID is there as a way to authenticate payments made through an Apple app – avoiding the PIN process altogether. There’s even iBeacon, which uses BTLE to let customers make payments from their phones in retail stores.

Apple wouldn’t even need to battle for consumer trust in the new payment system as the majority of iOS users would automatically switch, diving headfirst into the new features Apple rolls out in a vaguely cult religion press conference to the wide-eyed and baying masses.

While this would certainly have more people actively engaged with the mobile payments market, it would also completely damage the current balance of power. No doubt Apple would create a closed platform for payments, meaning iOS users could only ever pay with their system – much akin to how they can only use the App Store for apps and iTunes for music. Competition would become fierce on Android instead – which isn’t bad seeing as it dominates the market share for smartphones.

Still, if Apple entered the payments sphere, it could change the game just like the BankAmericard did originally.


[Image: tomblokd700 - Flickr]

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  1. Roy

    One word: Margins. Have a look at Apple’s profitability and then ask yourself why anyone enjoying such economics would want to consider entering a world where we invented a new descriptor (basis points) so that we wouldn’t feel bad saying “a percent of a percent”! Never mind the regulatory, fraud and customer service burdens involved. Apple would much rather make something of value and reap the rewards than tax a value exchange. IMHO.

  2. John BaRoss

    You are asking the right questions Vaughn. On the surface, Roy’s answer seems reasonable (margins), but then it was just over a decade ago when Apple pioneered an economic model that broke the decades old logjam of bundled music (on albums/CDs/etc.) – envisioning and executing a game changing consumer product ($.99 songs) that turned the slim margins of the music ecosystem into an unprecedented customer acquisition machine with super-glued customer retention magic … with head spinning volumes on $.99 transactions (obliterating conventional wisdom).

    Has the post-Jobs Apple caught the American-corporate contagion of wait-and-see what happens in other markets before copying innovation elsewhere? Specifically in the payments space, leadership of marquee digital media giants (music, games, news, etc.) have seriously viewed Carrier Billing as the Holy Grail of eCommerce … but for almost 2 decades that VAS marketplace demand has all but fallen on deaf ears in Telecom – especially domestic US Telecom.

    As US carriers actually retreat from carrier billing of eCommerce [other than surrendering to and pimping for credit cards via ISIS], overseas a quiet revolution is underway with Telefonica & Telenor’s “BlueVia” carrier billing undertaking. BlueVia is an example of proactively envisioning and mobilizing to be optimally position to capitalize upon and influence emerging uCommerce (Ubiquitous Commerce) paradigms that are inevitable as our cars, refrigerators and most every other appliance in our life style increasingly gets connected to the Internet. BlueVia has already moved its operator billing solution partner footprint to span portions of Europe, Asia, Central & South America with a network of over 400,000,000 customers (while in parallel, proactive young firms like Boku and Zong move forward with payment models that also understand the virtues of harnessing uber direct consumer billers).

    From the Apples and Samsungs to Telecom Carriers and even Electric Utilities (that also bill hundreds of millions), the companies with both the vision to harness these billing assets/direct customer relationships, and, commitment to ramp long term, will be the winners of the inevitable uCommerce models that are coming.

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