What Apple’s Payment Services Could Mean for Retailers and Consumers.
With 575 million registered iTunes accounts as of 2013 and 400 million accounts with credit cards attached, iTunes is the largest store of credit card information anywhere in the world. Hmm. Maybe in hindsight it was a little silly to not expect Apple’s entry into the financial service industry.
Recently, Apple charged prominent executives, store chief Eddy Cue, and online retail head, Jennifer Baily, to launch the new branch, but it’s unclear where Apple
plans to take its nascent payment department.
Apple could follow in Paypal’s footsteps. Utilizing its already robust digital payment groundwork, Apple could verify other companies’ transactions. Apple IDs wouldn’t just be for purchasing digital content, but also physical goods, and services: think checking out an Etsy basket or paying for an Uber cab.
Perhaps the biggest opportunity for Apple is in providing a simple, clean way for mobile developers to integrate payment options into their applications. Inclusion of its payment services in its App Store software development kit would give it a massive leg-up on its competition and streamline the design process for developers. While Apple certainly has the resources to spearhead such an initiative, they might set their sights on a Stripe acquisition, which is already making waves in the payment industry.
Apple has another option: expanding its Passbook app into a full service digital wallet. Coupled with Touch ID and managing with iBeacon, the company could make that sci-fi dream of tap-to-pay transactions commonplace, while avoiding the security pitfalls such a system could fall pray too. iBeacon could confirm that a customer’s iPhone is in the store, while Touch ID would ensure the owner is along with it. Apple’s credit card stores are already linked with email addresses, names, and phone numbers- adding fingerprint biometrics has the potential to make it the most secure digital wallet to date. And after several high profile credit card compromises (Target’s 2 million cards, Neiman Marcus 1 million cards), the added security could be incredibly appealing to existing iPhone customers, and could inform future iPhone purchases.
Although the question remains: if Apple did implement such a system, would retailers adopt it? After all, America seems perfectly content with the (albeit, more sophisticated) card-based retail system popularized in the 50s. Why would retailers invest in expensive, new point of sales systems? Enter Square. Increasingly popular with retailers due to its simplicity and iPad integration, acquiring Square would give Apple a solid foothold on both the consumer and retailer side of every transaction.
Apple’s direction is uncertain, but with the company’s substantial bedrock, it could look to be a real player in the payment market in a way Google couldn’t manage.