April 25, 2014

Apple is positioned to put PayPal in the ground

I stumbled upon this great WIRED article that points out something we should have realized long ago: Apple has all of our credit card information.

Through the release of their recent earnings call and the slew of data that came with, it was suddenly apparent that there are 800 million Apple IDs for iTunes purchases, and most of those have credit card info to go with. That's 800 million users who may, very soon, radically change the way they pay for things.

Apple is in a very unique position. Over the course of a decade, they have inadvertently created a huge market for a valuable digital service. That position is unique for two reasons: first, the number, and second, the trusted Apple brand.

Wireless payment methods already exist, but even established services like PayPal don't have the kinds of numbers that iTunes commands. WIRED writer Marcus Wohlsen reveals that existing services and other eCommerce sites - PayPal, Google Wallet, Amazon.com, Bitcoin - don't have even half of Apple's 800 million users. This means that, were Apple to offer a secure wireless payment service using Apple ID confirmation online and quick fingerprint scan authorization on the iPhone, they would already have a huge audience for that service. No customer acquisition required - just a brief stint of user education to encourage people to start implementing their new Apple iPay (I just came up with that name, but it's pretty good).

Apple's second strength is the fact that, well, that it is Apple. One of Apple's strengths is product and service integration. Their cloud service functions seamlessly across its varied products. The existing Apple ID set-up and iTunes purchase methods are intuitive and functional. If Apple were to implement a large-scale wireless transfer service using those same devices and the Apple IDs that users have already grown accustomed to, we can expect the same flawless cross-platform functionality.

It would be a natural step on the path towards the digitization of currency. Outside of the states, mobile and digital payments are the norm. Instead of using an Apple ID, in Europe, near-field communication is the norm - simply swipe your smartphone over a sensor at the register and your credit card information is gobbled up. In Africa, where carrying cold, hard cash can be a dangerous practice, SMS transfers are the preferred method of payment. In the same way that you might text CROSS to 55555 to donate to the Red Cross, cell phone users can text to their creditors mobile banking number to pay their bills or to purchase a product.

Whether for security's sake or efficiency's, mobile credit is the way of the future. Americans have just proven to be slow adopters. Perhaps they just need the right shepherd to show them the way. And Apple has got a mighty large flock.

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