Much of Apple (AAPL) CEO Tim Cook’s tenure has involved asking shareholders to be patient. There have been no spectacular new product releases since he took over from Steve Jobs, just a series of iterative improvements: thinner iMacs, smaller iPads, faster MacBooks and gold iPhones. All good, but nothing that would constitute a new line of business for the company to goose its revenues.
While most eyes have been on the long-awaited iWatch and the (so-far) mythical Apple television, Cook and company have been quietly assembling the pieces to what could become one of AAPL’s biggest businesses: mobile payments.
Cook has been dropping hints that Apple might just be getting ready to pull the trigger.
During the company’s January earnings call, he expressed an interest in the area and linked it to the Touch ID fingerprint scanner on the iPhone 5s. In April, he pointed out the massive number of credit card numbers Apple already has associated with user accounts thanks to its iTunes store.
Cook was quoted by CNBC’s Bill Hardekopf: “We now have almost 800 million iTunes accounts, most of these with credit cards. This is a staggering number.”
This was accompanied by news from Jason Del Rey at Re/Code that Apple has interviewed senior executives associated with the payment industry.
Wired’s Marcus Wohlsen puts all the pieces together and comes up with the conclusion that we could well see a “Pay with Apple” button next to the PayPal option for online purchases, along with the ability to pay for products at the cash register using Apple mobile payments technology.
The Components of Mobile Payments
For mobile payments to work, you need several key components. The first is the technology. Companies like Samsung (SSNLF) include NFC capability in their smartphones to enable the “tap and pay” transaction capability that Google (GOOG) has baked into its Android operating system.
Apple, however, has been snubbing NFC, instead promoting its Bluetooth-based iBeacon technology. Released last year as part of iOS 7, iBeacon is being widely tested by retail giants like Walmart (WMT) for pushing special offers to customer smartphones and tracking shoppers. And it does have mobile payments applications.
Apple is also rumored to be considering NFC in the forthcoming iPhone 6, a development that could let it take advantage of existing NFC terminals already deployed at many retailers. Using either Bluetooth (iBeacon) or NFC, Apple could extend its transaction technology to recent Android and Windows smartphones, so it needn’t be an iPhone exclusive.