Alongside Q1 results for Apple (discussed in “Apple feels the pain”) comes press speculation about a foray into the payments market. Any plans would have good foundations; the growing and loyal iPhone and iPad user base, the digital content business (iTunes) generating $16bn of revenue and retail outlets with net sales of $20bn for the year.
The payments business in the real world is however much more congested. Other smartphones have built market share, there are mobile wallets aplenty and banks hold many of the cards (see our report on Mobile banking). End customers want a good user experience with access to relevant information, preferably one-click to purchase and to know the transaction is secure. Many wallets out there offer these benefits and we doubt that Apple can offer something radically new at this level, even with its fingerprint reader.
Apple may see its edge with the retailer community. It has launched the iBeacon service to bombard customers with offers and advice as they walk around the store. This and other ideas are not unique (e.g, see our Little British Battler Paythru) but obviously the Apple brand and scale and will carry huge weight. Retailers however are hard-nosed and won’t implement technology unless it costs in. PayPal, another innovator, is making headway but is criticised by retailers for being expensive, proprietorial of the transaction data and inflexible. Apple may elicit the same response, especially if it attempts to build a walled garden around its broader payments ambitions.
Apple certainly has the cash, size and brand to make a concerted push into the wider payments market, but we believe that they will find it difficult to make the venture a success big enough to satisfy both their ambition and their shareholders.