In 2013 Apple dropped a number of hints that it would try its hand in payments at some point in the not-so-distant future. CEO Tim Cook turned speculation into reality during the tech giant’s 2013-Q4 conference call as he referenced the potential of the payments market. And while the final product may look vastly different than what many gurus envision, it’s clear that Apple will soon pair its wealth of credit card information with the established iOS platform to make a play in payments.
As many in the industry have pointed out, the 500 million-plus credit cards on file in the Apple Store serve as precious capital for a digital wallet – one which has already taken form in the Keychain feature on iPhones. With this kind of infrastructure, Apple may take its digital wallet into the increasingly popular ‘expedited checkout (Pay with Blank)’ space, which has recently drawn the attention of Amazon and Chase.
Better yet, Apple may use its digital wallet to give iPhone owners the option of linking payment information and loyalty cards stored in its Passbook app. Imagine receiving a notification immediately after a purchase at Target detailing the incremental rewards and coupons earned, as well as your loyalty point balance at the store. (American Express offers a similar feature through Passbook and its mobile app) Such a move could quickly derail progress made by Google Wallet on the loyalty front.
Perhaps an even more groundbreaking territory for Apple is proximity (in-store) pay, where the company has positioned itself well with its BLE (Bluetooth Low Energy)-based, iBeacon technology. The micro-geolocation platform provides Apple with the rails for driving in-store promotion and product discovery, potentially marrying deals with user preferences and purchase history.
It’s hard to know what Apple has up its sleeve for the actual execution of an in-store payment; QR codes and BLE appear to be two logical options in the near-term. The long-term approach, however, is obviously biometrics and the recently launched Touch ID fingerprint scanner, which would add a whole new layer of security to proximity pay. The beautiful aspect to Touch ID is that it can be leveraged in nearly every type of payment. Already used for Apple Store purchases, the feature can be easily employed in proximity and person-to-person (P2P) pay.
On the note of P2P, Apple may consider leveraging its Air Drop functionality, which is a Bluetooth-based technology allowing iPhone owners to pass photos and contact information to nearby friends. Launching an Apple P2P network could be as simple as deploying a standard payment app on iPhones that requires one-time entry of payment card or bank information.
As FIs, telcos and tech companies battle for consumer adoption of their respective wallets, Apple should be viewed as an emerging contender in the payments space, despite lacking any sort of payments resume. PayPal, in particular, has acknowledged the company’s fan-favorite reputation, already offering to white label its processing services to Apple. With Apple in the mix, don’t be surprised to see solutions like Isis, Google Wallet and LevelUp phased out of the payments picture by this time next year.