In 2012 Apple filed a patent with the US Patent and Trademark Office for a ‘method to send payment data through various interfaces without compromising user data’.
In other words, a patent for secure mobile payments. It seems like the time has come for Apple to put the technology into action.
Pay for goods with your Apple id
A recent Wall Street Journal article reported that Eddy Cue, the head of Apple’s iTunes and App Store divisions, has met with executives from the payment processing industry to discuss Apple’s intention to begin handling payments for physical goods.
Apple already processes huge numbers of payments for digital purchases through its iTunes Store and App Store, and that existing user base would give the tech giant an enormous advantage if it does decide to move into payments for physical goods – in its 2013 numbers Apple stated it had 575 million registered users for its iTunes store, and many of those users will already have registered their payment details with Apple.
The Wall Street Journal article went on to state: “In another sign of the company’s interest, Apple moved Jennifer Bailey, a longtime executive who was running its online stores, into a new role to build a payment business within the technology giant, three people with knowledge of the move said.”
So it seems Apple is not just not bouncing ideas around.
What does this move by Apple mean for the growing mobile payments market in the UK?
In the Forrester report mentioned by the Wall Street Journal, Forrester suggested the mobile payments industry in the US will grow by 603% within the next four years. A similar report from the UK Payments Council suggested the number of mobile payments made in the UK will grow by 321% within the next eight years. And Apple is not the only company that wants a piece of that pie.
The UK is home to a growing number of fintech companies, many of which are targeting the mobile payments side of things. Zapp from Vocalink, Weve (a joint venture between mobile networks EE, o2 and Vodafone), Pingit from Barclays and Zwallet from CloudZync will all be watching Apple’s move into mobile payments with interest.
Don’t rule out British fintech just yet
However, although Apple is a big challenger, don’t rule these home grown fintech contenders out just yet. They too have weight behind them.
Zapp hasn’t even launched its mobile payment offering yet, but it is already garnering some serious buzz. The reason for all the interest, and the factor that could help Zapp fight off competition from Apple’s mobile payments solution, is the fact that Zapp already has five of the UK’s major banks on board (HSBC, First Direct, Nationwide, Santander and Metro Bank), with a combined market share of more than 33% of all UK bank accounts.
Weve, which is also due to launch its mobile wallet later this year, has the backing of three of the four major UK mobile phone networks, giving it a potential market share of 80% of mobile phone users in the UK. Weve was originally billed as an m-commerce platform for mobile advertising, but its expansion into mobile payments shouldn’t be taken lightly given the size of the networks backing it.
Pingit is the mobile payment solution developed by Barclays bank, making it a direct competitor to Zapp. Barclays has about 15% of the British current account market, making Pingit a fintech offering worth watching.
Zwallet, a mobile wallet offered by Essex startup CloudZync, has got less muscle behind it than the companies already mentioned. However, CloudZync’s focus on merging mobile payments with loyalty schemes and reward vouchers could allow this company to carve out a niche for itself.
Of course, scale alone won’t be enough to ensure these companies can fight off Apple (o2 Wallet was recently mothballed despite being backed by o2).
However, if the history of Google Wallet is anything to go by it could still be a while before Apple’s mobile payments solution makes it to British shores – Google Wallet launched in 2011, but is still only available to US users.
So British mobile payments companies may still have some breathing room before Apple comes to pick a fight.
Philip Hoey is Senior Account Manager for Caxton FX, an international payments company based in central London.