Apple is finally going to get into mobile payments with the iPhone 6, according to Apple blogger John Gruber.
In a very short post, Gruber writes Apple is developing “a new secure enclave where you can store your credit cards, so you can pay for things at brick and mortar retail stores just by taking out your iPhone, but only if it’s one of the new iPhones.”
He also says Apple’s “new wearable thing” will have “the same magic payment apparatus.”
For years, analysts have wanted Apple to break into mobile payments. They see it as an opportunity to open new revenue streams down the road. Last week Ben Reitzes at Barclays said, “We also believe that an Apple-based payments system could eventually involve an expansion of revenue streams into promotions and coupons with retailers, but this type of functionality could also be done with Apps from others (and already is, in many cases).”
It’s unclear how mobile payments would open new revenue streams. However, if it works well and is easier than a credit card, then it’s another way the iPhone can differentiate itself against Android phones. Apple’s main business is selling iPhones, and a great mobile payments system would help that business.
Apple already has 800 million credit cards from iTunes users, which gives it a major head start on any payments solution. The company even has a patent for an “iWallet” platform, which leverages iTunes and an NFC chip to give users direct control over their financial transactions and accounts on their iPhones.
Earlier this year, Apple CEO Tim Cook said on an earnings call, “The mobile payments area in general is one that we’ve been intrigued with and that was one of the thoughts behind the Touch ID. But we’re not limiting ourselves just to that.”
He added, “I don’t have anything specific to announce today, but you can tell by looking at the demographics of our customers, and the amount of commerce that goes through iOS devices versus the competition, that it’s a big opportunity on the platform.”
Google has tried and failed to make mobile payments happen with Android using NFC, which is a wireless system used for transmitting data. Apple might succeed with NFC because Apple has a knack for timing, and execution with these kinds of things.
Importantly, the FT points out that U.S. retailers have to upgrade their cash registers by the end of next year: “Visa and MasterCard have set a deadline of October 2015 to switch from swipe-and-sign credit card payments to European-style chip-and-PIN terminals, many of which could also include NFC capabilities.”
If retailers are forced to switch, and Apple suddenly has an NFC-payment solution, we could finally see the long-discussed death of the wallet. Our phones might actually finally become the primary way to pay for things.
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