Is This What Apple, Inc.'s Payments Service Will Be Called?

Apple is likely planning some type of payments service in the near future. It already has all the pieces. Say hello to iTunes Pass.

Jul 17, 2014 at 8:00PM

Slowly but surely, Apple (NASDAQ:AAPL) continues to piece together various aspects of a possible payments service. Tim Cook continues to drop hints of Apple's ambitions, further fueling speculation. That includes tidbits such as saying the mobile payments market is in its "infancy," as well as noting on the last conference call that iTunes now has 800 million active accounts with credit cards on file. Plus, payments are an obvious use case for Touch ID.

Apple just quietly rolled out a new feature that could hint at what its possible payment service may be called.

Say hello to iTunes Pass
The actual feature may seem negligible. iTunes Pass is an easier way for users to add money directly to iTunes accounts. Apple's current method of doing this is in the form of redeeming gift cards whose value is then transferred to an account. With iTunes Pass, Apple is removing that step and allowing people to simply add money directly to their account at an Apple retail store.

Itunes Pass

Source: Apple.

The service also leverages Apple's Passbook, and has gone live in the U.S., Japan, and Germany so far.

What it means
While this move seems like it merely adds minor convenience, it does offer some possible clues about Apple's longer-term payments strategy. Eventually, Apple could allow users to add funds directly without the assistance of a retail rep, making use even more convenient.

More importantly, iTunes Pass is just one step away from offering a direct way to use an iPhone to pay for goods or services in a retail setting. To be clear, this would probably start in Apple's own retail stores. However, Apple could get broader merchant support after it creates an iTunes Pass payment platform. Retail merchants are already embracing other features that Apple has introduced that have retail potential, most notably iBeacon.

Itunes Pass Shot

Source: Apple.

Merchant adoption would only require a QR code scanner, which is a much lower hardware hurdle compared to supporting NFC. Combined with iBeacon, merchants could offer targeted and localized offers to iPhone users and then subsequently accept payment from those same iPhones using iTunes Pass.

It also suggests that Apple's method will be to store value on iTunes accounts, rather than become a payment processor itself. In other words, Apple could be pursuing more of a debit model than a credit-processing model. That also makes sense since Apple is probably uninterested in collecting payment processing fees; it just wants to sell more iPhones.

This would be similar to Google Wallet, which also stores money for later use. Google Wallet received an update Wednesday, adding features like managing gift cards and requesting money from friends and family. eBay's PayPal does both: processing credit card payments for merchants but also allowing users to store funds for later use. PayPal has also attempted to push into physical retail, but with limited success.

Apple has all the pieces of a cohesive payments service. Now it just needs to launch it.

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Evan Niu, CFA owns shares of Apple. The Motley Fool recommends Apple, eBay, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, eBay, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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