Apple eyes pay-by-iPhone
Would let Apple 'get a share of everything,' argues analyst
Computerworld - Technology that would let consumers pay for goods with their iPhones and iPads would be a way for Apple to jump-start micro-payments and reduce the transactions fees it pays, an analyst said today.
According to the Bloomberg news service, Apple will introduce near-field communications (NFC) in the next generation of its iPhone and iPad.
NFC lets mobile device owners wave a phone over a short-range wireless receiver or tap the device to make a purchase. The practice is widespread in Japan and has gained momentum in Europe, but adoption in the U.S. has been sluggish.
If Bloomberg's sources are accurate, Apple's move wouldn't be a surprise. Last July, the company hired Benjamin Vigier, who previously was product manager for mobile wallet, payment and NFC at mFoundry. Vigier conceived and managed the Starbucks mobile payment system on the iPhone, which began taking phone-based payments in 7,500 stores Jan. 19.
Ezra Gottheil, an analyst with Technology Business Research, said today that an iPhone/iPad-based payment system ties together several loose ends.
First of all, said Gottheil, a mobile payment system would give Apple a way to make money a new way.
"Apple doesn't have a revenue stream except for the goods that you buy, so this makes sense," he said, pointing out that its popular iTunes and App Stores, in which it sells soft goods rather than hardware, turn little if any profit. "They'd be sitting right in the middle of the transaction," giving Apple a new source of information about its customers' buying habits.
Apple is well-positioned to put itself in that middleman spot, Gottheil argued, because of its enormous iPhone and iPad owner base, their loyalty to the Apple brand and their demographics. "I can see a lot of [retailers] taking to this, and Apple leveraging [the iPhone's and iPad's] popularity," Gottheil said.
The company's $1 billion North Carolina data center would also play a part, said Gottheil, pinning a purpose on the new facility, something experts have wrestled with since Apple announced the start of construction in 2009.
Gottheil also saw a connection between a possible mobile payment system and a recent special Apple ran on iTunes. That deal, which ended Monday, priced 2010's biggest albums at $6.99 when purchased with an iTunes gift card.
"Apple pays a minimum transaction fee on every iTunes purchase, so by pushing the gift card, it's an advantage to Apple," said Gottheil. Purchasing a gift card results in just one transaction fee for Apple compared to multiple fees for each $.99 or $.69 purchase on its online music store. "Now they've given you a reason to use the iTunes card," Gottheil said.
Starbucks has used the same strategy to minimize transactions fees for small-scale charges, and to build brand loyalty, both factors Apple could reproduce by tying the pre-loaded iTunes gift cards or existing iTunes accounts to its planned payment processing system.
"That would make mobile payments work better for small payments, whether it's music or apps or a single issue of a magazine," said Gottheil. "Tie Apple mobile payments to iTunes accounts for online purchases, and Apple could get a share of everything."
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is email@example.com.
- How apps are changing fast food
- Starbucks hits $1B in mobile payment revenues in 2013, analysis says
- Are we giving up on mobile payments already?
- Get a free smoothie for an NFC tap
- Facebook to test new mobile payment service
- Isis mobile wallet to roll out nationwide this year
- Google Wallet chief's resignation another bad sign for NFC
- RIM gets Visa approval for mobile payments via NFC
- Mobile payments adoption in U.S. could take years
- iPhone 5's lack of NFC doesn't matter, survey shows
Read more about Mobile Apps in Computerworld's Mobile Apps Topic Center.
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Performance Management: The Mobile App Development Playbook This comprehensive 16 page Forrester Research, Inc. report, authored by Jeffrey Hammond, Forrester VP and Principal Analyst, details a number of valuable, commonly...
- New Problems Require Innovative Solutions The mobile market is expected to be worth $25 billion by 2015
- Getting Agnostic about Mobile Devices The idea of being able to interact with customers, prospects, and stay attuned to competitive pressures is not new, but the velocity at...
- Pay-as-you-Grow Data Protection: IBM Tivoli's Full-featured Data Protection Suite for Small to Medium Businesses IBM Tivoli Storage Manager Suite for Unified Recovery gives small and medium businesses the opportunity to start out with only the individual solutions...
- Meg Whitman presents Unlocking IT with Big Data During this Web Event you will hear Meg Whitman, President and CEO, HP discuss HAVEn - the #1 Big Data platform, as well...
- The New Way to Work Knowledge Vault This Knowledge Vault focuses on how, in today's increasingly virtual world, it's more important than ever to engage deeply with employees, suppliers, partners,... All Mobile Apps White Papers | Webcasts