Apple's Astronomical 800 Million ITunes Accounts Could Give It A Huge Advantage In Payments

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APPLE CEO TOUTS 800M CARDS ON FILE: Apple now has 800 million registered iTunes accounts worldwide, most of them with linked credit card accounts. “This is a staggering number,” CEO Tim Cook said during yesterday’s quarterly earnings call. Eight-hundred million accounts represents a 40% increase from the 575 million accounts Cook announced in June 2013, and we believe it to be several times the number of customer accounts on file at Amazon and Paypal. Apple’s huge number of credit cards on file has fuelled speculation that Apple will push further into payments. The company is said to be interviewing senior payments industry executives ahead of a major new initiative, but Cook didn’t reveal anything further about Apple’s plans on the call.

Apple might have a trove of credit card numbers, but that’s only “half of a payments platform,” says Thad Peterson, senior analyst at Aite. “The other half of the platform is merchants.” One possibility is that Apple’s Passbook app will be the launchpad for an eventual mobile wallet. That would involve merchants hopping on board to accept payments through Passbook — perhaps by scanning bar codes generated for the app. But the app has so far suffered from lackluster adoption among merchants, according to former Apple developer Ken Ferry, who helped build it. “There’s kind of a chicken-and-egg problem,” Ferry said, speaking on the Debug podcast earlier this month. “All of the interest of Passbook has to come from third parties” offering coupons or loyalty programs through it, he said. But Passbook still lacks merchant-friendly features, such as a way for retail clerks to easily send offers or vouchers to the app at the point-of-sale. “Why is anybody going to do it if it’s not already interesting?” (Debug)


Cover is a mobile payments app devoted exclusively to sit-down restaurants. Here’s an excerpt from our interview with co-founder Andrew Cove:

BI Intelligence: I guess the obvious question is, why did you build a payment app that only works for restaurants?

Cove: We landed on restaurants because we like restaurants, but also because we had a vision of what the better experience is. Mark and I didn’t say ‘Let’s start a mobile payments company and pick a vertical.’ We came to restaurants because every time we met up, we were eating and drinking, and we were passionate about this space. So we started thinking about the tackling the payment process and applying it to restaurants, which have the worst payment experience.

BII: Are you worried that restaurants are too tight a focus?

Cove: Americans spend a ton of money on food — over $US600 billion a year on food in general, and about $US200 billion of that is on sit-down dining. That is an enormous space to play in, and it looks so different from all other retail transactions. We think we can compete in that space without going head to head with the major players.

BII: What’s your strategy if PayPal starts pushing aggressively into the restaurant space?

Cove: I think the question is how they get there. PayPal’s approach thus far has been to partner with other companies that are working with small businesses. PayPal at its scale isn’t going merchant-by-merchant on adoption and merchant training. So PayPal has to solve all of the problems that we have, and they can’t do it bottom-up the way we can.

Read the complete interview exclusively on BI Intelligence.

VODAFONE EXPANDS M-PESA ROLLOUT IN INDIA: Yesterday, Vodafone announced that its M-Pesa mobile payment service is available at 60,000 outlets across India. The service, which originated in Kenya, and also launched in Romania last month, allows users to deposit, transfer, and withdraw money at authorised retail outlets using a standard mobile phone. M-Pesa experienced rapid growth among poor populations in sub-saharan Africa that lack access to basic financial infrastructure, but Vodafone India’s Suresh Sethi argues that it has wider appeal, too. “In Delhi and Mumbai, people use it mainly for money transfers,” he said at a launch event. According to Vodafone, M-Pesa had 17 million customers worldwide as of year-end 2013. (MORE: India Times, Business Standard)

As it spreads abroad, mobile money is gaining more attention in the U.S. Writing for the Atlantic, Dayo Olopade writes about how it was often easier for him to use M-Pesa than credit cards or paper money in Kenya. But he notes that part of what helped M-Pesa grow in Africa was a loose regulatory environment, which allowed a wireless carrier to scale as a money transfer service and de-facto bank. U.S. banking regulations are less flexible and ambiguous. “Given this headache, mobile money in the U.S. might end up looking different than it does in Africa, perhaps involving partnerships among wireless carriers, hardware companies, and banks.” (Atlantic)

FIDO ALLIANCE ADDS SAMSUNG TO BOARD: The FIDO Alliance, an industry trade group which seeks to develop and popularise common online authentication standards, announced that an executive from Samsung has joined its 18-member board of directors. Samsung’s representative is Michael Pak, vice president of the Security R&D in the company’s IT and mobile communications division. Executives from eBay, Google, and Blackberry also sit on the board. Samsung’s new flagship phone, the Galaxy S5, comes equipped with a FIDO-compliant fingerprint reader that can be used to authenticate payments made with the PayPal app. (FIDO Alliance)

BITCOIN IN SPACE? Jeff Garzik, one of seven-member core developer team that serve as the stewards of the Bitcoin project, wants a network of tiny satellites in orbit around the earth to help power the digital currency’s transactions. Garzik announced yesterday that his start-up, Dunvegan Space Systems, had awarded a preliminary contract to Deep Space Industries Inc. for the design of the satellites. The proposed project, to be funded by donations, would verify and rebroadcast “blockchains,” the transaction ledgers that power Bitcoin transfers. “We want to keep bitcoin healthy and free by finding alternative ways to distribute block chain data,” Garzik said in a statement. (MORE: CoinDesk, WSJ)

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