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Apple building mobile-payments business

  • Apple (AAPL) is working to expand its mobile-payments service so that its devices can enable users to buy goods and services, the WSJ reports.
  • Jennifer Bailey, who managed Apple's online stores, has been given the job of building the company' payment business, while iTunes and App Store chief Eddy Cue has been talking with relevant industry executives.
  • The report follows Apple patent activity related to mobile payments. With iTunes having 575M registered users, the potential looks rather interesting and the service could pose a serious threat to the likes of PayPal (EBAY) and Square.
  • Meanwhile, the NYT reports on an interview that Steve Jobs gave in November 1983 to then Rolling Stone reporter Steven Levy, who's publishing the transcript of the conversation to celebrate 30 years of the Macintosh. At the time, Levy left much of the interview out of an article he wrote about the Mac for the magazine.
  • "It's like computers and society are out on a first date in this decade," Jobs said of the 1980s. "For some crazy reason we're just in the right place at the right time to make that romance blossom."
Comments (29)
  • Apple will probably try to call it iPay. I vote for uPay. This should add a couple bucks to the bottom line. The apple blossoms are are going to beautiful this year and the apples, large.
    26 Jan, 03:47 AM Reply Like
  • This is what I have been betting on Apple to enter and among other products/services. This will be huge for Apple. I have a very good feeling going into earning this Monday. Tim said that they were significant back log of iphones and during the launch of ipad he said this year will be "Ipad Christmas". For a CEO to say something like that, he has to be very confident. I believe Tim will do the best for Apple. And why I'm 100% Apple stocks.
    26 Jan, 04:18 AM Reply Like
  • So could this mean that in addition of AppStore and iTunes, there would be something like "iMall" and Apple would challenge the likes of Amazon and Ebay? I don't think that Apple would start a massive retail business of its own, but rather get existing retailers to kind of open their own e-stores inside Apple's "e-mall". If that was the case, then Apple would probably bring its own already existing Apple Online Store to this "e-mall" too and maybe slowly expand its retailing into new product segments.
    26 Jan, 04:40 AM Reply Like
  • This is far bigger than most people imagine. It is about disrupting the existing business model of Visa, MasterCard and American Express not to mention the issuing and acquiring banks around the world. Look at the technology used at POS in the US, look at what happened with Target? Who do you trust to protect your data - Apple, Google or a bank? Protection I go with the first two. MC and VISA are still trying to catch up on Analytics and do not have a direct relationship with the customer. Amex because of its direct relationship may also have a long term competitor advantage to MC and Visa in some areas. PayPal will be pleased as this will raise the game and encourage more people to try alternative payment systems. Look at the technology at point of sale. It had not changed for years especially in the US. The Target data breach shows the challenge all face - my bet is Apple and Google have much stronger competences in data protection. These change will take time but whoever manufacturers those POS machines will be one of the first to face even more of a margin squeeze.
    26 Jan, 07:38 AM Reply Like
  • "It is about disrupting the existing business model of Visa, MasterCard and American Express not to mention the issuing and acquiring banks around the world."


    I knew this ignorant comment would get thrown around on an AAPL mobile payment thread sooner or later.


    Unless people are hooking their bank accounts up to ITunes, the only way AAPL will make this work is by processing the transaction through an existing credit card processor like MA, V, AXP or DFS.


    They will benefit as much or more if AAPL gets into this space.
    26 Jan, 09:25 AM Reply Like
  • And just like Ebay/Paypal, most consumers will hopefully have enough sense to use their CC on these mobile payment systems rather than bank account information which is more sensitive and risky to use.


    And to add to the above, MA and V are pretty much the biggest debit and credit processing providers around so I doubt AXP will have any kind of leg up on them in that regard.
    26 Jan, 09:43 AM Reply Like
  • Amen, CMOFSI!
    But I fear that your comments may cause a chopchop hissy fit.
    26 Jan, 09:50 AM Reply Like
  • Actually, since Wal*Mart introduced their "Bluebird" card from AmEx, AmEx has taken off and have shown that they can make end roads with V/MC.


    I would not be so confident that AmEx could NOT make a solid run with Apple.
    26 Jan, 10:13 AM Reply Like
  • The only hissy fits I've seen are from people who thought AAPL was a better investment these last few years than V or MA ;)
    26 Jan, 10:18 AM Reply Like
  • I use Paypal in addition to credit cards, and it works well. They should just offer eBay a a lot of money for Paypal.
    26 Jan, 10:58 AM Reply Like
  • "Unless people are hooking their bank accounts up to ITunes, the only way AAPL will make this work...."


    You have no idea what Apple might come up with to make this work. Why do you think you know more than they do?


    So far, their track record suggests that they are quite adept at disruption. Why would the mobile payments area be any different?
    26 Jan, 02:06 PM Reply Like
  • Maybe it's because iTunes charges my credit card currently. Just throwing it out there. But your right I am sure they are going to completely disrupt the transaction processing industry next.
    26 Jan, 02:32 PM Reply Like
  • @rrose39


    You have no idea either. It's not a good idea to invest in Stock hoping for the next disruption.


    People have been stuck in aapl the last couple of years on that very silly notion. Whether it was Apple TV, Apple watches etc.


    I can tell you v and ma are firmly entrenched in the payment processing space and have moved into mobile payments.


    Right now, you're telling me that aapl might disrupt that. How is that any type of rationale for investing in something??
    26 Jan, 02:33 PM Reply Like
  • I'll take V, MA, and DFS (not equivalent to the first two) all day long over AAPL.. Totally agree with you on this one.
    26 Jan, 06:21 PM Reply Like
  • it looks like we just might all be treated to a nice surprise Monday afternoon when AAPL reports, all of us, except the shorts that is!
    26 Jan, 08:01 AM Reply Like
  • And Icahn an Apple share holder is going after paypal and ebay hmm.
    26 Jan, 08:35 AM Reply Like
  • I believe this is a field that is slightly before its time when it comes to omnipresent security concerns. I haven't seen a massive embrace of the Square, Google Wallet, or other payment apps. The recent, and continuing, breach of Target (script written by a 17 year old) pushes people away from nascent payment technologies. I am most definitely still bullish on AAPL, as I think they do have a very good pulse on the consumer trends and desires, I just don't think the timing is right.
    26 Jan, 08:37 AM Reply Like
  • well, I hope so Mark. Some +ve earning from aapl might even nudge the market sentiment back towards +ve. Long aapl
    26 Jan, 09:57 AM Reply Like
  • this could decimate the growth of paypal....AAPL will likely even take market share away...genius move for sure. I am sure the market will be euphoric in marking up AAPL on Monday morning.
    26 Jan, 10:58 AM Reply Like
  • That is more plausible than affecting the payment processing companies themselves. Like eBay and PayPal, aapl would simply be an intermediary
    26 Jan, 02:38 PM Reply Like
  • Blackberry is going to beat them to the punch in the rest of the world outside North America.
    26 Jan, 11:30 AM Reply Like
  • We will all still have lots of credit cards. I think AAPL will enable us to put them all in a wallet on the iPhone, so no creditcard gets handed to a waiter, or scanned at POS. With fingerprint recognition, this reduces credit card fraud significantly, a service they can sell to V MA AXP.


    Silicon Valley is all about bitcoins as a payment method that will cut the costs of dredit card transactions. I'm guessing AAPL is looking at that too. It won't all happen at once, but the fact that AAPL built fingerprint recognition into iPhones indicates they've been thinking about this for some time now. A scaled rollout could include an acquisition. But rather than backing V vs MA, for example, they'd want to make business simpler and less costly for all of them, by cutting credit card fraud, and enabling simpler cross border payment systems as bitcoin does. Interesting times.
    26 Jan, 12:00 PM Reply Like
  • This is brilliant! Today, US customers cannot trust stores like Target. Why should you suffer identity theft and continuing attacks while Target rakes in your money. You are their patsy, and your wife cannot stay away.


    Apple might get 7 to 9 percent of every sale paid by an Apple device.


    The global Apple investment bank is well stocked with about $150,000,000,000.00. This is like an inverse Costco where Apple membership vets customers a priori.
    26 Jan, 12:26 PM Reply Like
  • And yet, according to certain people, Apple is dying, because they are losing percentage in a moving-target "market" that morphs continually due to the rapid replacement of feature phones by smart phones. The Apple bears expounded a long steady death for Apple, but in reality were short-term traders whose personal bets would make or lose money on the short-term changes, and who took advantage of the opportunity to take some profit and get out of their short positions while the getting was good.
    26 Jan, 12:37 PM Reply Like
  • way too early to proclaim Apple safe and sound and edible for the next decade.


    Their OS is ridiculously bloated and their battery life reveals this.....Blackberry (or Foxconn) will produce a phone capable of 50 hours of battery life on a single charge before Apple produces one with 20. JMHO.
    26 Jan, 12:44 PM Reply Like
  • Keyser, we are all slowly dying. Like a broken clock, certain people on SA will be right for a moment.
    26 Jan, 12:54 PM Reply Like
  • I wish Apple would close trading till Tuesday open. That sure would throw a wrench into the traders spokes.
    26 Jan, 08:09 PM Reply Like
  • I'm not sure about this one. There were many rumors int he past, the devil is in the detail in payments:


    Margins, reversing dubious/erroneous transactions (either siding with the vendor or buyer, each side will try to game the system), compliance...finally antitrust issues in some countries because of Apple's size.


    I'm not sure Apple wants to enter the payments business directly or just add a layer on top of credit card companies like Paypal etc.
    26 Jan, 09:14 PM Reply Like
  • This is a step toward my phone becoming a payment device and a storefront for an internet iBank without calling it a bank. Technology is already In place for a secured payment authorization in the 5s device. The smart Apple guys are years ahead of competition. Imagine approving a transaction payment on Amazon with ur fingerprint or even "wiring" money from one iAccount to another based on a finger print and/or facial recognition. ..... Finally, V and AXP are most likely already talking to Apple to be their preferred providers in exchange for infrastructure.
    26 Jan, 10:33 PM Reply Like
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