Looking to build and expand on the success of Apple Pay, a new report from the Wall Street Journal claims that Apple is looking to build a payments service that would enable users to seamlessly and quickly send money to others via their iPhones. Without question, such a service would present an immediate competitive threat to PayPal's Venmo service and Square's Cash service.
As it stands now, it appears that Apple's rumored payments initiative is still in its early stages, with the company reportedly engaging in some entry-level talks with a number of financial institutions, including JP Morgan Chase, Capital One, Wells Fargo, and U.S. Bank. Of course, before any deal is inked and completed, there are a number of security, logistical, and monetary details to iron out. While it stands to reason that Apple can get a handle on any security considerations that might arise, one naturally wonders what percentage of each transaction Apple may be seeking from banking institutions per transaction.
But, interestingly enough, the Journal relays that Apple may be completely OK with breaking even on the service, and perhaps positioning its new payments service as a means to generate more hardware sales.
It isn't clear how Apple intends to make money from the service. Indeed, the company may view a person-to-person offering mostly as a way to get more consumers to convert to its phones.
Under the current discussions, Apple wouldn’t charge the banks for participating in its person-to-person payment service, said the person familiar with the talks. That is different from Apple Pay in which the banks pay Apple for each transaction.
If this is indeed accurate, it would be a smart move for Apple. In this particular scenario, banks don't necessarily need to negotiate with Apple at all. That being the case, if Apple can come up with a really intuitive and easy-to-use payments service, it will undoubtedly help differentiate the iPhone from competing Android handsets to an even greater degree.
As for a launch date, the report claims that Apple is aiming to have such a service rolled out sometime in 2016, perhaps suggesting that it may be a flagship feature of iOS 10 next year.