According to sources at the Wall Street Journal, Apple has begun discussions with larger US banks about a person-to-person mobile payment system.
The new system would allow iOS users to send money to other users directly, similar to PayPal’s Venmo or Square’s cash systems. So far the talks are merely in the beginning phases and only some details have been released. The news of Apple and big US banks meeting to discuss the potential for person to person payments may set off an explosion of new technologies and competition in the fintech sector.
The interconnectivity of the internet has led to new financial systems, like P2P online lenders and mobile payment systems through smartphone devices. Many other firms have pushed for person-to-person direct payments, bypassing traditional banking services.
Currently PayPal and Square offer similar services in the US. But the push by Apple will have a major impact within fintech, considering Apple’s massive institution prowess and larger user base. Unlike Apple, PayPal and Square are focused mainly on online payments, whereas Apple already has an integrated and widely used system with which to support online and person-to-person payments.
Early speculation over Apple’s P2P payment system include the idea that users may even be able to bypass Apple Pay and make payments direction through the Messages app. Sources also show that Apple was approved for a patent involving an encrypted P2P payment system earlier this year.
Some of the banks in discussion with Apple are big Wall St players, including JP Morgan Chase and Wells Fargo. The combination of both Wall St with a company like Apple could prove fatal for other online payment providers hoping to find some market share.
According to Norm Merritt, CEO & President, ShopKeep, “Apple’s person-to-person payments solution is gas on the Apple Pay fire and it’s going to drive adoption. This has been a long-time coming, and the advantage Apple Pay has over Venmo is their large install base and more secure transactions, making it more widely accepted. Unlike Venmo, Apple Pay will extend beyond P2P, including merchandising. This is where Apple Pay over time will blur the line; becoming the first virtual bank. Evolving from Apple Pay, this is a natural next step.”