Ronnie05's Blog

Apple: Of mobile and web payments and virtual currencies. The future of money transaction

Posted in Revenues and Monetization, Value added services and applications by Manas Ganguly on November 30, 2010

Apple for a while has been rumored to be interested in and working on mobile payments. Given the strength of Apple’s great innovation track record and the influence that Apple products wield over the industry, technology and the eco-system, Apple’s interest in Mobile payments is noteworthy. Time and again, repeatedly, Apple has brought forth innovations in various segments it has operated in viz. smartphones (iPhone), Tablets (iPad), Application (Apps store), Music (iTunes and iPod). Given Apple’s stake in Web 2.0 and Mobile 2.0 technologies, a mobile payment platform is a natural extension, a transaction enabler and the missing piece of the monetization game.

Not that Apple is new to the game. They are already doing mobile payments since they launched the iPhone. Their solution is built on an existing payment relationship – iTunes to download music on the web. Apple’s 160 million iTunes users outweigh Paypal’s 90 million.

Contactless payments or Near Field Communication chip iPhones could open up payments and they could help create new business models for in store payments. This could also couple with location based ads and other applications. Apple drove the development of new business models with the music and smart phones – depending on what they do they could change the rules by which different players interact to do payment and commerce. So they have the potential to move the NFC world forward significantly by developing a new tapestry of the hardware, software and business models to move it forward. While NFC has been on the horizon for a while with sporadic trials by Obopay and others, Apple moving into this space should ignite the market. Apple’s moves will have particularly powerful impact, and the only other player who is also mulling contactless payment solutions at this point is Google.

Apart from Contactless payments, Apple is also trying to specialize in allowing users to use their mobile phone number to purchase digital content on the web using their phone number and their phone bill. Boku, a gateway specialist in Mobile carrier billing is rumored to be in talks with Apple for a possible acquisition.

Then there is this talk of Apple trying to create an online Virtual currency much like the Facebook credits for the Application and iTunes purchases. There are significant volumes in there for Apple and again the eco-system is pretty well set and Apple would only need to put the online currency in place for this transaction system to talk off as well. This would mostly cater to P2P payments transfer, casual payments, payments to individual merchants, cross border remittances and check replacement. In markets where P2P is fully implemented it represents over 50% of the mobile payment transactions. This is a big opportunity and right in Obopay’s sweet spot.

Apple is already big in mobile payments with iTunes and Apps store and Apple would sooner be looking to leverage this play into a bigger pie of online and instore payments.

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