‘Bank of Apple’ Moves Closer With New Patent To Kill PayPal, Square.
Apple AAPL -0.29% has quietly filed for a new patent which details a person-to-person money transmission method which could potentially grab market share from PayPal and Square, and hit the already beleaguered banking sector struggling to keep up with FinTech.
Apple is already banking on consumers using the wallet in Apple Pay as their central source for general payments, and having recently announced at WWDC that Apple Pay will soon be available in the UK (Apple Pay is reportedly coming to the UK on July 14th) that’s a huge additional market to tap into, especially to lure British consumers away from using contactless cards which dominate the UK banking sector. But the killer feature missing has been a method to transfer payments between people, and now Apple plans to remedy this with Apple Pay and the wallet.
According to Patently Apple, “Apple’s invention generally relates to wireless communications, wireless electronic devices, and more specifically to techniques for conducting financial transactions by communicating encrypted financial credentials between the wireless electronic devices.“
In other words, an iPhone user will activate their Wallet app, chose a stored card that they want to use to make the money transfer with, and type in the amount they would like to pay. The payment would then be authenticated using Touch ID or the iPhone’s passcode. The wallet system would also let the person pick the recipient of the funds from nearby iPhone users.
Whats not clear is whether the Apple Watch will play any part in initiating a transfer of funds. Unless this arrives with the Gen2 Watch as a complimentary feature.
This has massive implications for a number of reasons:
- A direct swipe at PayPal, Square and others for simple money transfer could impact their services if successful
- As traditional retail banks struggle to offer quick and easy services for customers this could be another nail in the coffin for those who can’t provide innovation in the current account space
- As Barclays and other banks experiment with wearable tech for contactless payments, Apple could kill off other R&D projects waiting in the wings at other institutions unwilling to take the risk
- With £3bn in funds being transferred in the UK alone via banking apps, Apple is hoping to tap into a huge payments market for P2P transmission
This method is nothing new in terms of simple money transmission. M-Pesa was launched in 2007 allowing for funds transfer and borrowing without bank branches all via mobile.
Apple credits Senior Director of Apple Pay Engineering Timothy Hurley who came to Apple from Citibank for the new idea.
When, or even if, Apple decides to implement this is anyones guess at this point in time. Apple has a history of patenting many things that never see the light of day. But one thing is for certain; if it does hit, it will only hurt other FinTech wallets.
Of course, Apple is well known for locking in users as much as possible in their ecosystem, this is just another play to make sure you never leave the fold. To find out what I mean, read how Apple just makes us all complacent.