Apple will soon be the way you pay online and beyond

“The most impressive number from Apple’s earnings call this week wasn’t how many iPhones it sold or how much money it made. Those numbers are monstrous quarter after quarter,” Marcus Wohlsen reports for Wired. “More striking was CEO Tim Cook’s revelation that about 800 million people now have accounts on Apple’s iTunes service. And most of those accounts are tied to credit cards.”

“That number is astonishing — by comparison, Amazon.com has some 237 million active customers — and it could point toward a new Apple future,” Wohlsen reports. “As countless rumors hint at the imminent arrival of new Apple products — rumors Cook did nothing to confirm or dispel — the company’s credit-card trove means one new tool is almost inevitable: a payments service. Apple may soon become a way you pay for all sorts of stuff across the web, inside mobile apps, and maybe even as you walk to the counter at a brick-and-mortar retail store.”

“PayPal, the reigning king of payments on the net, runs 143 million active accounts, and that’s impressive — except in comparison to Apple,” Wohlsen reports. “Owning an iPod, iPhone, or iPad makes little sense without an iTunes account for filling up those devices with music, podcasts, videos, and apps. Every piece of Apple hardware doubles as a store for itself. As a result, Apple is in a position to capitalize on its market dominance and create a broader payments service, one that could help you pay for all sorts of stuff. Such a service might let you buy things online, as PayPal does. But as Cook indicated with that nod to the iPhone fingerprint reader, Apple could also turn the iPhone into a secure way of paying for stuff in the real world, inside brick-and-mortar retail stores. Hold your iPhone up to a scanner on the counter, and you’re done — or with iBeacon, don’t bother coming up to the counter at all. With your credit card already on file, your fingerprint would be the only signature you’d need.”

Much more in the full article here.

Related articles:
Apple interviewing senior payments industry execs for ‘very serious’ mobile payments push – April 21, 2014
Not For Commerce: As Apple declines support, more retailers drop NFC – March 19, 2014
Apple leads, the rest follow: Google dumps NFC requirement in Google Wallet app – September 18, 2013
Apple’s NFC killer: iOS 7′s iBeacons – September 11, 2013
iBeacons may prove to be Apple’s biggest new feature for iOS 7 – August 29, 2013
Apple v. Android: Bang per watt – Apple’s massive advantage – August 13, 2013
Apple’s Passbook strategy eschews NFC hardware to power iOS 6 retail apps – September 4, 2012

32 Comments

  1. One of the reasons I enjoy using my credit cards is all the member benefits that I receive. For example here is the list of benefits I get from my Discover card:

    * price protection (reimburses me if the price of the item drops)
    * warrant protection (doubles the warranty of the product up to a year)
    * free rental car insurance
    * 5% cash back on various categories

    Will a Apple payment service provide any of these benefits? If it doesn’t I am not going to use it for major purchases and travel.

      1. It isn’t just Discover though. All the major credit card issuers VISA, MasterCard, and American Express offer these benefits.

        Does that mean I work for every credit card company?

        1. I don’t see why Apple couldn’t offer those benefits too, but can one up them to the benefit of Apple.

          – use Apple bank to earn award points for purchases from Apple’s iTunes purchases or Apple store (brick/mortar and online) for Apple products to keep the Apple faithful, well, faithful for that next iPhone, iPad or Mac!

    1. What most people forget is that until AAPL switch accounts from credit cads to cash card or account transfer then it just does not make sense for Apple to worry about processing payments since it will have to pay the credit card companies fees.

      How many retailers do you know that would pay Apple additional fees on top of what they would pay say Amex or Discover to accept Apple payment methods?

      Of course it is possible for Apple to engage credit card companies and offer them payment systems that saves those companies big $ for a small fee if it can demonstrate that it’s devised payment system is better than what they offer. They did this with the Music industry so it is possible. If this is the route then all those incentives from credit card companies will remain intact. If not, I am sure Apple will figure ways to attract people to use its payment system.

      Go Apple

      1. Couldn’t Apple just make their own credit card? And then process payments themselves? How hard can that be? Discover was created from whole cloth, wasn’t it?

        1. Of course they can but when I look back at Apple I see a company that is not willing to become something different so I just don’t believe they will become a financial company. There are way too many regulations.

          However, we have seen Apple to help other companies and take a cut from the profit. It has done that with Music, Games, Books, video to name a few.

          I don’t think the company has changed its mindset of late if you consider all their accusations have been to save on direct R&D and take on talented people that could easily prosper inside Apple’s culture. Can you really see a finance person be part of that culture?

      2. I do look forward to one day being able to pay with my iPhone or future iWatch.

        Hopefully, Apple can figure out a system that is both easy to use and superior to what the credit card companies have now.

        Go Apple indeed.

    2. Not sure your concern here… Any payment system Apple develops would more than likely make use of your credit card on file in your iTunes account. You’d get all the benefits of your bank card and the convenience of using your Apple device to make the payments.

  2. Even though they have a smaller user base, Amazon RULES in this area over Apple, as most of those Apple accounts are dormant, aside from the occasional app purchase.

    The Reason?

    Apple childishly closes itself off… even when it doesn’t have to, yet on Amazon you can purchase just about anything.

    A perfect example is Apple TV. It actually costs twice as much as its competitor (Roku), with one-tenth the openness and content. The only advantage it has is Airplay, which at least in my opinion, is not enough to switch from Roku. Apple intentionally wont let you stream Amazon natively, you have to stream it from your iDevice. This is exactly why Apple TV is a ripoff and an Apple payment system will never take off, because besides iOS apps, Mac hardware, and movies that you can easily rent and buy somewhere else, what else does Apple sell?

    Zilch, that’s what!

    1. Apple has two major aspects in it’s favor over Amazon. First, a customer service phone number where you can talk to a person versus Amazon e-mail. Second, brick and mortar shops to help with problems or show fixes, maybe do returns for swap outs.

      What does Amazon do? Ships stuff. Anything else? Zilch.

      In fact, purchased an item the other day. First went to Walmart online. Then Amazon. No price difference. Purchased at Walmart. Why? Pick up product using their “site to store”. When I go to pick up item and something is wrong after visually inspecting, i.e. broke or wrong item, it doesn’t leave with me. It’s staying at Walmart being their problem to fix not mine!

  3. Apple doesn’t need to become a credit card company or a bank. You should be able to enter different cards or account into “Apple Payments” to be able to use for purchases
    Then if you are able to make a purchase via your apple device from a retail store or online the Apple Payments system should complete the purchase and you can choose what method to pay with. Even better would be if the Apple Payments system know all your cord benefits and recommended the best way to pay.

    1. 1. Bank of America Corp. Charlotte, N.C. $2,340,667,014
      2. J. P. Morgan Chase & Company New York, N.Y. 2,135,796,000
      3. Citigroup New York, N.Y 2,002,213,000
      4. Wells Fargo & Company San Francisco, C.A. 1,223,630,000
      5. Goldman Sachs Group, Inc. New York, N.Y. 880,677,000
      6. Morgan Stanley New York, N.Y. 819,719,000
      7. Metlife, Inc. New York, N.Y. 565,566,452
      8. Barclays Group US, Inc. Wilmington, Del. 427,837,000
      9. Taunus Corporation New York, N.Y. 364,079,000
      10. HSBC North America Inc. New York, N.Y 345,382,871

      : $130b cash

      Crunch the numbers, wizards.

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