Apple’s billion dollar mobile payment magic trick

“Apple shares have fallen more than 35% since hitting a record high last September,” Jonathan S. Geller writes for BGR. “The tech press has declared that Apple is doomed. On the defensive. Unable to compete with Samsung. Never mind that the company only pulled in $13 billion in profit last quarter, and only has $140 billion in cash, and that Apple has the best-selling smartphone in the world. There is one thing that Wall Street analysts have forgotten in their reports, models, and projections — Apple has 500 million iTunes accounts with credit cards.”

“Why would Apple reportedly be putting a fingerprint reader in its next iPhone in order to introduce NFC? Just to be extra secure?” Geller writes. “Probably not. It’s my guess that Apple isn’t simply going to use NFC as a tap and pay gimmick, but rather to become a payment processor. The intermediary in between a merchant and the credit card companies. Apple will be able to let you seamlessly buy anything and charge it directly to your iTunes account, and it will take a reasonable commission on every purchase made.”

Read more in the full article here.

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    1. You obviously don’t know how the merchant credit card system operates. There’s ALWAYS a middleman who handles all of the processing — the heavy lifting of credit cards. VISA and MasterCard etc. don’t bother with that part, they just extend the credit and guarantee payments.

    2. Actually, I have to agree, slightly.

      Its been my experience with Apple iTunes, that Apple has NO REAL idea how to do financial business. Someone got Apple to ok a charge to my card and iTunes said it was my fault for allowing the charge??? So they cancelled my card from their system cause I and my charge company paid for a false transaction……….. But iTunes is the one who processed the false transaction…..

      No, I just do not see Apple becoming a middle man. They have terrible problems with the iTunes charges as it is. If my bank spots a possible false charge, they call me to clear. If iTunes allows a false charge, they blame you. And you cannot talk to them, you have to do a three day email chat??????? What???

      So while I love Apple hardware and most software, their financial efforts still suck big time. My opinion and experience.

  1. “reasonable commission” and Apple? Are you kidding? It will be 70/30 split. But seriously, I would rather see Apple negotiating the fees with credit card companies so there will be no impact on customers or – better yet – eliminate the credit card company and open the First Bank Of Apple.

      1. Will Apple charge more or less than the credit card companies? Is that your question? There will definitely be a partnership with Walmart (there already is). I can’t imagine Apple would undercut the credit card companies, but I guess you never know.

        In any case, this would really put the hurt on Amazon.

    1. So, processorts don’t set ‘commissions’. All of this is regulated by our oversized government (Dodd/Frank) (Durbin Amendment), and greatly effected by the associations (Visa/MC/D/Amex).

      What Apple gains as a processor is a very small piece of a pie. But, when you have 500 million small pieces, the scale yields huge revenue.

      My company is both an issuing and acquiring processor, we could only dream of having 100M consumers. Let alone 500M. This is a huge opportunity for Apple and would give them significant leverage with the associations. We shall see.

    2. Ridiculous. Apple takes 30% from the App Store because Apple also provides servers to host files, marketing apps, and much more for developers. Taking credit card payments would only result in a typical credit card charge paid by the seller, usually about 1.75%- 3%.

      1. 30% of 1.75% – 3% is between .5% and .9%. Take that over 500 million iTunes customers and the number may be significant.
        If you then add in all the third party payments and the sky is the limit.

  2. Seems possible to me. Why not? Those iTunes customers are a potential gold mine if monetized properly. But that next iPhone is a long way off. Sounds like a July delivery at best. The stock may be down to $300 by then. AAPL sure needs some help. And soon.

  3. Apple as a financial intermediary? Taking a cut on every transaction? Do I really look that stupid? Don’t get me wrong, I sit in front of a 27″ iMac all week, take a MacBook Pro home every night and use an iPhone 5. Apple does NOT have my credit card details though…

    1. How to kick Apple in the teeth 101: FIRST, say that you are an Apple fan, or you have ALL apple products or you have used Apple products since 1984… SECOND, say you hate everything they are doing today.

      This formula may have worked in the past. Today we can see you a mile off.

  4. why do we need another middle man? CCs are already a middle man between us and a merchant.
    So now we’re going to give money to apple, apple takes a cut, gives the rest to the CC company, they take a cut, and pass the rest on to the merchant?


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