Apple’s next-gen iPhone could finally kill the credit card

“If, as predicted, the next-generation iPhone includes a chip that makes the device scannable at checkout counters, Apple could catalyze a transformation in how money moves that is at least as substantial as the improvements in how data moves that Cupertino forced upon the telecom industry,” Marcus Wohlsen reports for Wired. “At first, an iPhone wallet likely would act as a surrogate for credit cards, a way to store the data of multiple cards but using the phone as the way to transfer that data instead of a swipe.”

“But over time, the point of holding onto any of those cards, which become digital abstractions once they’re on the phone, likely will fall away,” Wohlsen reports. “Instead, for all anyone with an iPhone is concerned, the way to pay will be Apple.”

“It’s Apple, not the credit card companies, that have the control, even if those iPhone wallets are being used to “store” those credit cards. The credit card becomes abstract, just another option to tap that otherwise stays hidden. Really, you’ll be paying with Apple,” Wohlsen reports. “Once the credit card becomes that hidden (do you remember which one is connected to your iTunes account?), it’s only a short logical step to that card being eliminated altogether.”

Read more in the full article here.

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23 Comments

  1. Taking this to it natural conclusion that the iPhone will soon control just about anything, loosing or breaking your phone (which is common) means that you will be locked out of your home, you car and purchasing ability. As cool as it is, it sounds like too many eggs in one basket.

    1. Exactly. He saids that you forget about the credit card once it’s in IPhone. Well you will surely remember it when the bill shows up at the end of the month.

  2. This is one of the most thoughtful articles in recent times.
    Yes, without the iPhone, we won’t have superfast mobile broadband. We would still have those old flip phones. It takes Apple to transform technology.
    First it was personal computing. But Apples UI design gave way for the WWW. Now it is mobile computing. Twitter would not been as important without the iPhone. Next will be banking, health, and hopefully transportation. I want an Apple design car: simple, elegant, safe, and awesome

  3. Here’s the area I see a problem with this scenario … Restaurants. Are you going to unlock your iPhone 6, and hand it to a server to take back to the payment terminal to swipe? I have not seen an portable NFC payment systems for servers to carry from table to table. Every restaurant I know of still uses the ticket then pay system. Which means that while I’ll be able to use my iPhone 6 at any store that has NFC payments systems, I’ll still need to carry the card to pay at restaurants.

    1. There is a solution to every problem. It’s very common outside of the US for restaurants to scan credit cards table side (CC always in sight). If NFC is the tech needed these mobile registers will get NFC to do the job. I can easily think of a half dozen other solutions to this problem.

      1. +1
        I see a combination of iBeacon and AirDrop. iBeacon would know what table you are at push the bill and you use a version of AirDrop to move the money, no paper bill, no swiping no handing off your phone.

    2. I was at a conference held on one of the Disney resort hotels in Orlando. When you check in you get a wrist band that acts as your room key, parking pass to open the gate and payment at the restaurants on site. The waiters did bring over a portable payment device. Instead of bringing the little book with your bill in it he brought a little machine. You tap the wrist band, key in your pin and add tip. All gets charged to the room. So, they do exist and could easily be rolled out on a large scale.

    3. In Europe, the waiter brings a card reader to your table, and you swipe the card then and add any amount for a tip. No reason why restaurants in the US can’t do the same.

    4. That is quickly going away in many parts of world, which started switching to chip-and-PIN credit cards 5-10 years ago. There’s still places that do a swipe and sign, but even there a portable terminal is often brought to you.

      1. I spend considerable time in Chicago, NYC, LA, Vegas, etc. and entertain customers a lot there when I do – I have yet to have any form of payment device brought table side at any restaurant, no matter how cheap, or swanky. It is always check in book, stick your card in, they take it away, they bring back the copy to add tip and sign. Restaurants are not looking to add equipment costs to their operations to satisfy what will be a small fraction of the population for several years. Are you going to risk going out to a restaurant without at least one card in your wallet? What are you going to do to pay the bill when they say they “don’t take iPhones”?

        1. I did start by saying “in many parts of the world.” You listed only US cities, and the US is extraordinarily resistant to change when something is “good enough” (where have we heard *that* before…?)

          Of course we’ll still carry around CCs for the next little while. The point of my comment had nothing to do with the iPhone or rumoured iWallet, it was that the “server takes your credit card away from you” ritual is rapidly becoming a non-issue if you live in many parts of the world (that isn’t the USA).

  4. A credit card is effectively a credit account, which historically has always been used by way of a card. Whenever you make a payment online, you’re not using the card, other than perhaps to get the details from.

    Physical cards may disappear but there will always be multiple credit companies and a myriad of options provided by them. Apple, or any other single company is not going to do away with every single credit “card” option.

    At the moment I stooze money on my credit card by using long interest free payment periods to save the money in various accounts. I make about 5% on everything I spend. In the past i’ve used cashback cards and rewards cards. All that is forgetting my actual credit rating.

    Apple makes a limited selection of phones because other areas aren’t worth bothering with, they make a profit on what they sell. It’s different in terms of credit, the people who buy iPhones will have a wide range of credit scores, and Apple or any other company wouldn’t be able to take the same approach. When it comes to essentially lending money there’s always room for competition. You can’t really innovate the same way you can with software/hardware.

    Pretty much anyone can get credit to buy an iPhone, I doubt Apple will want to be the people to give it to everyone though.

    1. And when the expectation of that imagination isn’t met? What happens then? Critics claim Apple failed. Yet, Apple never claimed to single handedly transform the most intrenched industry (banking/credit) in the world. Their devices will solve certain use case problems and perhaps open new opportunities for advancement. They will not do away with credit cards.

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