Apple P2P payments could give the company another way to expand its role in consumers’ everyday financial activities. Apple had already explored person-to-person payments through patents and discussions with major banks, potentially putting it in competition with established services such as PayPal, Venmo, and other bank and fintech payment platforms.
One particularly significant possibility was integrating payments directly into Apple’s existing communication tools. Patent filings suggested that users might eventually be able to send money through messaging, email, phone calls, or even calendar invitations. Such integration could reduce friction by putting payments inside applications consumers already use rather than requiring them to open a separate P2P payment service.
Apple has long been expected to get into the person-to-person (P2P) payments business joining People Pay, PopMoney, ClearXchange, as well as PayPal, Venmo, Dwolla and a host of other online and mobile P2P service providers. Apple’s interest in P2P is not just rumor, they patented plans for a mobile based P2P service years ago and then in November, 2015 were reported to be in talks with major banks on the topic. As reported recently in Quartz, Apple filed another patent just last month that broadens its P2P payments capabilities beyond messaging apps and includes, at least conceptually, the ability to make payments through a variety of channels:
A patent filing published earlier this month (Dec. 2015) indicates that Apple is not only looking at allowing people to send money over its text messaging service, but other services built into the iOS platform, including phone calls, email, and calendar invites.
Last month, Quartz reported that people close to Apple said the tech giant was exploring adding payments to iMessage.
As the article points out, just because Apple applies for a patent doesn’t mean it will act on it, but Apple is positioned to make a difference in P2P payments. Not just because it is one of the most widely known and trusted brands in the world, but because it has the opportunity to launch a P2P service without being encumbered by the need to deliver revenue:
Thus far it’s proven difficult for companies to make money through peer-to-peer payment services due to low margins. However, that may not matter to Apple. Adding payments to communication apps it already owns will be a way for the Cupertino, Calif.-based company to tap into a coveted demographic.
Apple P2P payments could have an important advantage over competing services because Apple would not necessarily need the product itself to become a major source of revenue. Instead, P2P capabilities could strengthen Apple’s broader ecosystem, increase engagement with its applications, and make its devices more useful for everyday financial transactions.
While patent filings don’t guarantee that a product will reach consumers, Apple’s existing customer base and control over iOS give it a strong foundation for P2P payments. Integrating money movement directly into communication tools could also differentiate Apple’s offering in an already crowded market.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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