Apple is looking to integrate mobile payment technology into iOS, including a deal with Visa, which would allow iPhone users to pay for physical goods with just their smartphone.
In addition to a pair of iPhones with larger screens, a smartwatch, and new versions of its mobile and desktop operating systems, a new report from The Information says Apple has been discussing a mobile wallet product so iPhone owners can pay for goods in physical stores with just their smartphone.
Numerous other mobile payment systems have been tried, including implementations from PayPal and Google, but if any company can succeed where others have failed, it's Apple.
The report says Apple's system "would involve a so-called secured element" in its phones, likely the "Secure Enclave" included in the iPhone 5s that stores and protects Touch ID fingerprint data so that it's only accessible on the phone itself and cannot be reverse engineered, transmitted, or retrieved over the internet in any form.
It's unclear how significant the talks have been, but the report says Apple has already reached a deal with Visa, the credit card processing giant. Apple has three-quarters of a billion customer accounts through its iTunes and App Store platforms, and many of those include stored credit numbers, likely more than any other company. Apple CEO Tim Cook has expressed interest in mobile payment technology but hasn't delved into specifics, only saying that the company is intrigued about the "big opportunity" that mobile payments present.
Sporadic rumors have suggested that Apple might include near-field communications (NFC) chips in the iPhone 6, but there has been little hard evidence to suggest this to be accurate, even as hardware prototypes continue to leak out of the Far East.
It's possible that a direct partnership with Visa could encourage retailers (large and small) to jump on board with an Apple payments initiative, as it's unlikely that Visa would work exclusively with Apple — instead, Apple could be the first partner in a larger industry-wide initiative. Getting the iPhone on board, with 40%+ market share in the United States, would be a significant first step. Other payment schemes, like the LoopPay, which has a clever magnetic stripe copier that can be used at most stores that swipe credit cards, can require extra cases and software. Thus, they have barriers to use that a built-in, first-party solution wouldn't have. Additionally, any solution designed for magnetic stripe cards will be obsolete in the next few years as US retailers switch to fraud-resistant chip-and-pin solutions that are very popular in Europe.
For any business involved in credit card processing, mobile payments, or security, any Apple's actions in this area will have significant ripple effects. Simply by throwing its weight behind a potential standard, Apple can push entire industries, particularly a relatively nascent one like mobile payments. Though lots has been discussed and predicted in the arena, no platform or standard has gotten significant traction.
The Touch ID protocol is expected to expand to the iPad this upgrade cycle, which could make it the perfect time to launch a fingerprint-authorized mobile payments system.
Do you think Apple is likely to get involved in mobile payments this fall? Let us know your thoughts in the discussion thread below.
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