Report on Apple in Payments

April 18, 2014 – A recent Celent report offered insight on how Apple might assert itself in the payments space. Celent, a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies, reviewed Apple’s payment-related assets, including relevant patent applications and described a potential roadmap for Apple’s entry into the payments industry.

Study author Zilvinas Bareisis, acknowledges lacking insider information on Apple’s famously secretive plans, but outlines a possible 3-pronged approach for Apple payments: facilitation of broad payments acceptance online; facilitation of broad payments acceptance in physical stores; and a more disruptive play in payments and lending.

With iTunes media store, Apple already provides payments for digital content for Macs, iPhones, and iPads. Apple also offers the Passbook app, which collects mobile wallet apps and stores payment credentials in iCloud. Through these technologies, together with the TouchID fingerprint scanner, Bareisis says Apple has the technology framework for a competitive payments system.
The Wall Street Journal reported that Apple has already tasked Vice President of On-line Store Jennifer Bailey with building a payments business.

The degree to which Apple’s market entry would create disruption in payments depends on Apple’s regional marketshare, according to Bareisis. “Apple is very important in the U.S. and Japan and several other countries where it dominates the smartphone market. In Europe, Android and other non-Apple platforms have around 80 percent of the smartphone market,” Bareisis said.

Assuming that Apple’s payments platform is based on payment cards, card issuers would likely benefit, collaborating with Apple in mobile payments. However, if Apple planned a lending solution, it would negatively impact the credit card industry, with banks benefiting from POS lending.

Read the full Celent report here: http://www.celent.com/reports/apple-payments-what-expect