Read the original article on Wired. Copyright 2014. Follow Wired on Twitter.
RELATED: Silicon Valley's Rush To Get Rich Off Weed
Apple does also have its oceans of user data to offer, and it’s possible that Apple’s design prowess could result in a payment process that’s so pleasing it just gets people to spend more money. Before the company invents such a magic bullet, however, the most likely first step could be payments within apps themselves. Already, the App Store lets users pay for virtual goods in games and upgrades for all kinds of freemium apps. The next step could be to make iTunes a way to make in-app payments for real things, such as Uber rides or Airbnb rooms. That arrangement could be the easiest for Apple to implement, and the most convincing first step for the company and app developers.
Hints of a payments platform constitute their own subgenre in the churning Apple rumor mill. This week, for instance, Re/codereported that the company was interviewing executives for top positions “focused exclusively” on building a payments business around “the hundreds of millions of credit cards it already has on file.” During Apple’s prior earnings call in January, Cook said mobile payments “intrigued” Apple and were part of the thinking behind the fingerprint sensor built into the iPhone 5s.
“In the end, everybody wants developers making mobile apps for their platforms to make a lot of money,” one payment industry executive says. That’s because, if app developers make lots of money, they’ll build more, better apps, and that helps a company like Apple sell devices where those apps run. That’s no small thing. However much money Apple stands to make if it becomes the next way you pay, it knows that the most important transactions of all are those that involve buying products with Apple’s logo plastered to the back.
EXCLUSIVE FREE REPORT:25 Big Tech Predictions by BI Intelligence. Get the Report Now »
John Moore/Getty Images
RELATED: Intimate Photos Reveal The Day-To-Day Life Of Stormtroopers
RELATED: Here's How To Fix Your iPhone's Goofy Autocorrect
That number is astonishing — by comparison, Amazon.com has some 237 million active customers — and it could point toward a new Apple future. As countless rumors hint at the imminent arrival of new Apple products — rumors Cook did nothing to confirm or dispel — the company’s credit-card trove means one new tool is almost inevitable: a payments service. Apple may soon become a way you pay for all sorts of stuff across the web, inside mobile apps, and maybe even as you walk to the counter at a brick-and-mortar retail store.
The most impressive number from Apple’s earnings call this week wasn’t how many iPhones it sold or how much money it made. Those numbers are monstrous quarter after quarter. More striking was CEO Tim Cook’s revelation that about 800 million people now have accounts on Apple’s iTunes service. And most of those accounts are tied to credit cards.
It’s this last part that’s the toughest trick of all for any would-be payments service. Persuading merchants to accept a new way to pay, payment industry insiders say, can take a while. While it’s true that Apple’s brand and vast user base would be strong selling points, what any merchant cares most about is fees. This necessarily makes payments a low-margin business as providers vie with each other to shave percentages to make themselves the checkout option of choice. The question is whether those low margins would be enough of an incentive for Apple to offer a mobile way to pay in physical stores, or even offer a “pay with Apple” option next to the PayPal button on internet retail sites.
Yes, there are other payment services. PayPal. Google Wallet. Bitcoin. But Apple is in a unique position. Like Google, it controls the phone. But unlike Google, it has been busy collecting credit card numbers for more than a decade.
Regardless of how the transaction was made, Apple could get a cut of each payment, and it would also learn more about your behavior. User data–what links people click, what searches they perform, what photos they like–is worth billions of dollars to internet companies. But payment data–information about what people actually buy–is perhaps the most valuable user information of all. Today, Apple isn’t as likely as a Google or a Facebook to use personal data as a means of, say, targeting ads. But that may change. And even if Apple isn’t interested in tracking your individual habits, a payments system can give it a better idea of how the consumers spend money. That can help the company identify the new products and services it should build — or perhaps more importantly, give Apple data to trade back to merchants in order to convince them that allowing their own customers to “pay with Apple” is worth it.
As a result, Apple is in a position to capitalize on its market dominance and create a broader payments service, one that could help you pay for all sorts of stuff. Such a service might let you buy things online, as PayPal does. But as Cook indicated with that nod to the iPhone fingerprint reader, Apple could also turn the iPhone into a secure way of paying for stuff in the real world, inside brick-and-mortar retail stores. Hold your iPhone up to a scanner on the counter, and you’re done — or with iBeacon, don’t bother coming up to the counter at all. With your credit card already on file, your fingerprint would be the only signature you’d need.
It all starts with those credit cards. PayPal, the reigning king of payments on the net, runs 143 million active accounts, and that’s impressive — except in comparison to Apple. The Cupertino behemoth has managed to acquire such a massive card collection because, since the iTunes store launched in 2003, it has offered a simple, obvious reason for hundreds of millions of people to turn over their credit card numbers. Owning an iPod, iPhone, or iPad makes little sense without an iTunes account for filling up those devices with music, podcasts, videos, and apps. Every piece of Apple hardware doubles as a store for itself.
SEC Moves to Make Decision on VanEck-SolidX Bitcoin ETF Proposal
The U.S. Securities and Exchange Commission (SEC) announced Thursday that it has begun proceedings to decide whether to approve a proposed bitcoin exchange-traded fund (ETF).
The SEC published an "
Enigma Delays Release of 'Discovery' Protocol on Ethereum Mainnet
Engima, the startup seeking to bring privacy to the world of public blockchains, is delaying the launch of its mainnet as part of a wider reworking of its developmental roadmap.
The company had pre
Just a Cycle? Big Bitcoin Miners Stay Positive in Face of Market Slump
Despite the downturn in the crypto markets so far in 2018, executives from several bitcoin mining firms have said this scenario has been seen before and they are not deterred by current low prices.
Quick Brew? BitFury's Coffee Machine Accepts Bitcoin Via Lightning Network
Blockchain firm Bitfury has come up with a novel product aimed to make it easier to pay for products with bitcoin.
To that end, a specialized engineering team within the company has developed a cof
Coinbase Disputes Claims in New York Attorney General's Exchange Report
A recent report published by the New York Office of the Attorney General (OAG), which claimed several cryptocurrency exchanges it investigated are vulnerable to market manipulation, has drawn backlash
Bitfury Reveals New Generation of Bitcoin ASIC Chips
Bitfury Group has developed a new, more efficient bitcoin mining chip, the firm announced Wednesday.
The Bitfury Clarke application-specific integrated circuit (ASIC) chip "offers the strongest per
US Lawmakers 'Strongly Urge' IRS to Update Crypto Tax Guidance
A group of U.S. lawmakers has called on the nation's Internal Revenue Service (IRS) to release comprehensive guidance for taxpayers earning gains on cryptocurrency investments or transactions.
Brazil Moves to Probe Banks After Crypto Exchanges Denied Services
Brazil's antitrust watchdog is investigating whether the major banks in the country worked together to close off access to cryptocurrency services.
The Administrative Council for Economic Defense (