Apple may be considering an entry into the ever-growing and lucrative mobile payments business according to industry insiders. Reports are emerging that Eddy Cue, the company’s App Store chief executive has been participating in a series of meetings with payments executives to explore the possibility of a foray into the creating of “a payments business for physical goods and services.” It has also been reported by Apple insiders that Jennifer Bailey, a known executive with Apple’s online store business has been moved into a new role to oversee the development of a mobile payments business for the tech giant.
This isn’t the first time that Apple has reportedly considered such a move into the mobile payments business. The company considered entering the market back in 2011, even doing some leg work to create a “wallet app.” Ultimately though, the Cupertino company decided to bow out at that time reportedly due to concerns about “near-field-communication tech’s battery drain” and the development of a bad image if customer’s using an Apple payment platform had negative interactions with merchants. The company’s only real stretch into the mobile payments arena has been the creation of its Passbook app which allows users to store such items as electronic coupons and gift cards. It is possible that Apple’s move into the world of mobile payments could happen as an extension of Passbook, but that is just speculation at this point.
Last spring, Apple CEO Tim Cook told investors that the mobile payment business was “still in its infancy.” It now appears as though Apple may be ready to take the leap and help the business mature. Carl Icahn, the activist investor, famously wrote in a well-circulated letter to Apple shareholders just this week that the company should be moving into the mobile payments market.
Apple already has a number of systems in place that could be of immense value should it choose to enter the mobile payments business. The company has sold nearly half a billion mobile devices to date and has millions of credit cards already on file thanks to its market-dominating iTunes store. Its iPhone fingerprint scanning technology could be used to prevent fraud, say some. Apple’s intense interest in sapphire coated screens may play a part too. If Apple is able to get a patent on the sapphire screen and the screen is required for the touch technology to work, they may have a real advantage over competitors.
Apple would enter a rapidly growing and lucrative business should it choose to take on development of a mobile payments business. It is estimated that Americans spent $12.8 billion dollars through their mobile devices in 2012, a number that continues to grow. It is believed that by 2017, the amount spent annually could reach $90 billion.
Market analysts say that a tech-giant like Apple entering into the mobile payments sector would be a game-changer. No doubt companies already there such as PayPal, Square and Stripe are anxiously awaiting official word from Apple about their intentions. One analyst has referred to Apple as “the sleeping giant in the payments world.” Certainly not everyone will be in a hurry for that giant to wake up.
By Michele Wessel