“Reports noted earlier this week that Apple is planning to embed Near-Field Communications (NFC) technology into its next-generation iPhones and iPads,” Vijayan reports. “If the products were NFC-enabled, users would be able to pay for purchases just by waving their iPads or iPhones near retailers’ payment terminals.”
“Similar contactless payment technologies have been around for years, but they’ve only received a lukewarm reception, at best, from consumers,” Vijayan reports. “What’s likely to make Apple’s offering vastly different, however, is the company’s huge base of 160 million iTunes users, said Avivah Litan an analyst at Gartner.”
Vijayan reports, “That base gives Apple the ability to operate largely as a ‘closed payment system’ with minimal need to interface with credit card companies and banks, she said. ‘They can largely shut out credit card companies if they choose to,’ and operate in much the same way that PayPal has done in the virtual world, she said… ‘I see Apple as being a PayPal on steroids,’ Litan said.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
Credit card companies soak the merchants with fees, soak the consumers with fees, so I say, “Go Apple!”
Something doesn’t make sense here. When I buy/rent something via iTunes, I pay for it with (wait for it…)
my credit card!
Yes, iTunes has my credit card on file. It’s the only way of which I know to purchase ANYTHING thru iTunes.
So, what’s up with the lack of logical thought processes in these NFC in iPhone/iPad speculations?
MW: reaction, as in “my knee-jerk reaction”
Welcome to the First Bank of Apple.
@Kevin J. Weise:
You just move your money from the card to Apple’s virtual bank and spend it from there, </b>not taking the card itself with you.</b>
NFC allows much faster and easier way to buy things and whatever happens is immediately transparent.
Ebay just put down some collateral and poof! PayPal is a bank now!
That means that the iBank can set its own terms in accepting the cards, as the major banks exchange each others debits in a clearinghouse and don’t charge each other fees.
Maybe Apple should buy PayPal? Or Visa?
wait for it…..
the pay phone!
(couldn’t resist)
PayPal can kiss my red Apple too. I’ll never let PayPal have direct access to my funds again.
yeah, except everyone pays their iTunes bill with a Credit Card… figure a way around that (besides gift cards) and I’m sold!
I run a small business and I know that the credit card companies soak us. On average, @2.5% of all my transactions goes to them in fees. Hell, they make more money on the transaction than I sometimes do on my sales. Something is wrong with that!!!!
Go Apple, take on the banks and credit thieves.
PS
I have never trusted PayPal.
Still using that tired phrase: like blah blah “on steroids”.
FAIL.
What’s that? Oh, we’re not using ‘FAIL’ anymore either?
Apple would be taking a piece “off the top” of the transaction, instead of the card-issuing bank.
With Apple’s user base, Apple could in turn negotiate with the Visa/MasteCard Association for lower discount fees going to the bank who issued the Visa or MasterCard that was used in the transaction.
The cardholder would not have a charge to him or herself. Only the issuing bank would see less of a discount fee to it.
In turn, the issuing bank might get a crack at all the iTunes accounts by advertising it’s card benefits, or whatever.
Just my 2 Cents (or percentage points).
It’s a gravy train.
To extract maximum profits from this technology, Apple may need to avoid the use of MasterCard, Visa and other credit/debit card companies.
Under this strategy, Apple would purchase a (small) bank or acquire its own credit card company. Then when we wave our iPhones near a retailer’s reader, the transaction debits your account at the iBank or you get billed by iCard at the end of the month.
An alternative would be for MasterCard or Visa (or both) to provide huge volume discounts to Apple, and the purchases could be booked by those companies, as currently.
Most likely (I believe), MasterCard and/or Visa could simply pay Apple for the right to place their apps on the iPhone (the customary 30% of revenues) and they could simply piggyback on Apple’s technology.
In short, there are several ways of making this happen. Apple’s approach is usually to focus on making consumer electronic products and let others provide the supporting services. Thus, I believe MC and Visa will probably continue providing payment services, with Apple creating the next-generation technology that replaces plastic cards.
What this article doesn’t mention is the next phase in the operation: Where iPhone users can transfer dollars among themselves by entering an amount, a PIN and waving their phones in close proximity of one another. This technology is comparable to that already in the BUMP app, so it shouldn’t be difficult to arrange.
Apple could cause some serious carnage with Visa and Mastercard.
The biggest money would require a credit card company or a bank.
Even just acting as a conduit between the iDevice and the bank, Apple could skim some cream with minimal effort. If this is well done, consumers would be that much more loyal to Apple.
I don’t want an iPhone with shriveled up nuts.
Kevin J. Weise:
You probably didn’t get the 2008 memo, but no one says ‘wait for it….’ anymore. Also gone:
“Dude!” (particularly when uttered by women)
“I know, right?!”
“Whatever.”
“Fail”
“Epic!” (particularly when uttered by women)
“Really?”
This is a language rich in resources and opportunities for those who use it to be individuals and not cling to robotic repetition.
You now have the memo. Sally forth and write well!
@Jeph
You probably didn’t get the 1898 memo:
Nobody – male or female – says “Sally forth” anymore.
That’s really an epic fail, dude.
Back on topic …
Am I the only one who mostly uses iTunes gift cards for my iTunes purchases?
I get a $25 or $50 each month or so, and buy a song or app or video here and there, as the mood hits me. No interest payment required from me. No fee squeezed from Apple.
Now imagine: I go out and buy 20 or so $50 gift cards (over time, most likely … or not, if I have the means). And then I use the $1000 or so accumulated ‘iTunes Dollars’ to buy, say, a television. Or a washing machine. Or something else that makes my previous 99cent purchases look ridiculous. Apple might charge only 1% or less to the vendor and still make plenty on the deal as compared to regular (i.e. much smaller) iTunes & App Store purchases.
I might even buy my next iPhone or Mac in an Apple Store the same way, thereby saving Apple the 2.5% fee THEY would normally pay Visa or MC or Amex or Discover for the same purchase.
I don’t know this is what’s in the cards. I just think it would be great for Apple and consumers and merchants if it were.
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I sure hope this new payment system will not use the iTunes credit.
If this were to be the case, the average iTunes credit would be so high that it would represent a risk for malicious apps that make use of the 5 min time lapse during which an Apple ID login remains valid after authentication.
This could be huge. There are several large enterprises who would want to fight any threat to their income, but like the record labels they may have no way to cope with the tidal change inevitable with new technologies. If not Apple, somebody else, but better for almost everyone if it is Apple doing this.
Apple being the middleman to me buying physical products?
I’ll pass.
I think this will have a low adoption rate and will be noted as one of Apple’s big failures.
IMO Google will be the one to shine here.
People seem to be missing the fact that an iTunes gift card can be purchased with cash at many stores and the balance is stored in your iTunes account. THEREFORE, the use of your credit card won’t have to be as extensive……….not to mention that a credit card is mandatory only if you want to make purchases and do not have an iTunes gift card balance.
I think thats a great idea. Why not let Apple be the middleman? If some massive corp is gonna profit simply becuase i bought something, why not have it be a massive corp that actually produces something worthwhile? Besides the products Apple makes, this idea is like a econ 101 description of how a well functioning market economy is supposed to work. Actors come up with more efficient way of doing things, less capital wasted in transaction means more capital to buy & invest with for everybody, and the inventor/implimentor of improved method reaps just rewards … If your reallya believer in capitalism=progress, this is it baby.
I use iTunes gift cards for all my iTunes purchases – I have my CC on file because Apple required it, but I have never used it for a purchase. I might be the exception to the rule though.