Apple Pay: Apple's secret weapon for emerging economies

Person-to-person Apple Pay payments will widen Apple’s appeal in emerging economies

Apple, Apple Pay, finance, mobile payments


Emboldened by huge success in China, Apple is moving to make an impact on other emerging economies worldwide, with India seemingly next in line. The company has a secret weapon as it broadens its appeal in these markets – and that weapon is Apple Pay.

This is what we know so far: Apple is working to introduce person-to-person payments to Apple Pay, according to the Wall Street Journal.

“The service under consideration would allow consumers to zap payments from their checking accounts to recipients through their Apple devices,” the report states. “The service would likely be linked to the company’s Apple Pay system, which allows customers to make credit-card and debit-card payments with their mobile phones.”

At present Apple is speaking to US banks, but I don’t believe the plan stops there. If it does then Apple is missing an opportunity.

Here’s why:

Those of us in so-called “advanced economies” can easily think everyone has a bank account, but billions are disenfranchised from a banking system that really only works for a relatively privileged few. The one billion people worldwide earning less than $1.25 a day are too poor for bank accounts, but would benefit from access to financial services.

Think about crowdfunding as a way to unleash innovation and to support local communities, projects and businesses. Think about loans. Think about the opportunity for poor subsistence farmers to find better deals for those products they do sell than they get from the local agents who buy their crops with exploitative deals.

For example, rural farmers in northern Bangladesh needed schemes that combined loans and savings in sync with the growing season, enabling them to survive the lean periods while having a secure place to save during harvests.

Unlock potential

Access to innovative new financial services could unlock a cycle of poverty in communities, and payment services like Apple Pay (and extensions to that service Apple must be planning) will assist in this. It should be possible for a person without a bank account to pay someone else with no account using Apple Pay just by adding the transaction to their PAYG bill.

Mobile payment services are incredibly popular across emerging economies. Take Africa, where around two-thirds of Africa’s population have mobile phones even though less than a quarter have a bank account with a traditional bank. (Mobile phones are not luxury items – they are popular because of the vast geographies and lack of good fixed line infrastructure).

Access to financial services, including innovative new services bought to market by more agile players will unleash huge social and economic improvements across these communities.

Good karma

We’re not quite there yet.

Right now Apple is only talking about a service that allow consumers to “zap payments from their checking accounts to recipients through their Apple devices,” the WSJ claims.

All the same, by providing personal payments Apple has a chance to make Apple Pay part of the solution, not the problem.

Unlocking local economies by offering services like these isn’t just good karma, it’s also good business – doing so will boost Apple’s market share in those economies as they become unlocked, underpinning other efforts to build presence in these emerging markets.

It’s a shame the established banking system, so heavily subsidized by us all has failed in its hundreds of years history to empower these states in the same way.

Apple has an opportunity to make a positive difference.

I don’t think it will refuse it.

(PS: End-to-end encryption is essential to support fintech innovation and any government that doesn’t understand this is bad for business and needs to be replaced.)

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Copyright © 2015 IDG Communications, Inc.

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