Credit Cards Challenge PayPal in Apple Mobile Payment Launch

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Credit cards stand ready to give PayPal a run for their money, as Apple sets the stage for the long-anticipated iPhone 6 launch and brings a new challenger to the mobile payment market. Fortune magazine gives credence to reports that the newest version of Apple’s popular smartphone will feature technology that will allow the company to compete for domination of the lucrative mobile payment industry. Apple CEO Tim Cook reportedly plans to reveal the device and the long-awaited iWallet payment system on Tuesday, Sept. 9.

The iPhone 6 is expected to contain near field communications technology (NFC) that relays data between wireless devices via radio signals when the equipment passes in near proximity to another similarly equipped machine. Apple has been working with credit card companies to iron out the details of creating a viable mobile payment system and make it available to their customers via their smartphones. Banks, retailers and credit card giants such as Visa, American Express and MasterCard have been in talks with Apple to cooperate on creating an iWallet system that gives iPhone customers a seamless payment experience at retail outlets and grocery stores.

Although the company did not invent the idea of mobile payment technology, they are trying to synthesize the available components and knowledge. Their goal is to provide iPhone owners with an efficient shopping experience and facilitate receipt tracking, in order to drive more customers toward Apple’s products and services. Piper Jaffray analyst, Gene Munster asserts that Apple’s real motivation is to infuse such ease into shopping and electronic payments that their competitors in the mobile credit card market, such as PayPal, cannot duplicate the accomplishment.

PayPal spokesperson Anuj Najar points out that payment processing can be a tricky business that requires trust to work properly. Nonetheless, Apple is confident that they can make the iPhone and its mobile payment system a widespread reality in the daily lives of their customers. Some sources say that the new iPhone 6 could contain a fingerprint ID scanner to verify users and maintain system security. In conjunction with the microchip technology embedded in many debit and credit cards, some assert that the new system will be more secure than traditional forms of electronic payment.

The challenge to universal acceptance of mobile payments is the need for a large-scale infrastructure shift at point-of-sale retailers. Payment terminals need to be upgraded to communicate with chip-driven debit and credit cards. Credit card companies are putting pressure on the merchants and the situation is slowly changing. Los Angeles area analyst, Gil Luria of Wedbush Securities explains that business owners are currently in the process of boosting their systems to work with NFC technology. Therefore, it may turn out that Apple’s launch is catching the leading edge of a wave that carries established modes of conducting business to a new level, as the prevalence of NFC-equipped payment machines grows over the next few years.

Research analyst Colin Sebastian of Baird acknowledges that while PayPal has long set the standard and holds a solid position in the mobile credit card market, he feels that Apple’s iPhone 6 launch represents the most compelling challenge to their market share. Other players include Google, Softcard (formerly known as ISIS and recently rebranded to distance itself from the militant jihadist images the name now evokes) and Starbucks. An alliance of retailers, including Target and Walmart are cooperating to create their own mobile payment system, known as CurrentC.

These other e-payment networks have warmed the market up for Apple as customers are acclimating to the new way of doing business. Millions of Apple customers have already shared their credit card information with the company via their App Store and iTunes accounts, giving the company a valuable market segment of loyal buyers to help them break into the world of mobile payments. The Apple Insider website reports that the Apple iOS was the most popular holiday shopping platform in 2013. Looking forward to the upcoming iPhone 6 launch, if it lives up to the abounding rumors about its potential to challenge PayPal’s supremacy in mobile credit cards, Apple is setting its sights on the future, weaving what once resided only in the realm of science fiction into the fiber of everyday life.

by Tamara Christine Van Hooser



Apple Insider

Business Report