What to Make of The Rumored Expansion of Apple Inc. Into Mobile Payments


Source: Flickr / Jason Howie.

Do you only pay for things after reaching for your wallet? Countless companies are trying to change that.

For years individuals have been wondering what the next step in innovation is for Apple (NASDAQ: AAPL  ) , and if recent reports are any indication, expansion into mobile payments could its biggest move. This follows the news from last week Facebook (NASDAQ: FB  ) was weeks from receiving approval from regulators in Ireland to begin its mobile payments expansion

Source: Flickr / Jun Seita.

The reports
In January, the Wall Street Journal reported Apple had begun efforts to lay the "groundwork for an expanded mobile-payments service, leveraging its growing base of iPhone and iPad users and the hundreds of millions of credit cards on file through its iTunes stores." 

This news came just two week after the U.S. Patent and Trademark Office revealed Apple had filed a patent which was a "method to send payment data through various air interfaces without compromising user data." 

Three days after the WSJ report on Apple's conference call discussing the most recently quarter earnings -- when the company reported a staggering $13.1 billion in net income -- Apple's CEO Tim Cook said in regards to opportunities in mobile payments:

"The mobile payments area in general is one that we've been intrigued with, and that was one of the thoughts behind Touch ID... I don't have anything specific to announce today, but you can tell by looking at the demographics of our customers and the amount of commerce that goes through iOS devices versus the competition that it's a big opportunity on the platform." 

Earlier this week was reported "Apple has been interviewing senior payments industry executives to push ahead on a plan to build an electronic payments business, according to two people familiar with the process," by Re/code, a news and analysis site focusing on the technology industry. 

Through the first four months of 2014, seemingly not a week passes without further news suggesting Apple is one step closer to mobile payments.

The question surrounding mobile payments
While consumers are becoming more and more comfortable in using their smart phones, adoption of mobile payments has been slower than many have anticipated.

The consultancy McKinsey noted in a recent study, "despite the launch (and relaunch) of dozens of applications with various added benefits beyond simply "paying with your phone," consumers are not yet broadly using these applications, and they are certainly not leaving their physical wallets at home."

This was the result from the fragmented nature of the industry, but more importantly, consumer's immense amount of concern surrounding the security of their personal and payment information. It is easy to believe this concern from consumers may be devastating for Facebook, as a result of the skepticism many already hold toward it regarding their personal information. Yet at the same time, this could be the exact thing Apple needs to succeed.

Optimism for Apple
Apple is estimated to have more than 600 million users with stored credit card information. Such an eye-opening figure reveals that people are truly comfortable with the Apple keeping their precious information secure. In addition, technology like the finger-print access utilized by the iPhone 5s gives many another sense of assurance.

All of this even fails to mention the reality that Apple already has its featured Passbook App, allowing users to store not only payment information but also things like airline tickets.

When you combine the innovative nature of Apple, consumer's existing trust in its security, and its massive user base, one has to believe its journey into mobile payments will be one met with great success.

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