Apple reportedly interested in handling mobile payments — Would you use iTunes over Paypal or Square?

Apple reportedly interested in handling mobile payments — Would you use iTunes over Paypal or Square?

Rumors of Apple getting into the mobile payments business have circulated for years. They have half a billion people registered with iTunes, almost as many iPhones and iPads in the market, hundreds of millions of credit cards on file, they already handle mobile transaction at Apple Stores, and Passbook has been integrated into iOS since 2012 and iBeacons since 2013. The pieces are in place. Yet it remains a complicated business to get into. Douglas MacMillan and Daisuke Wakabayashi for the Wall Street Journal:

Eddy Cue, Apple's iTunes and App Store chief and a key lieutenant of Chief Executive Tim Cook, has met with industry executives to discuss Apple's interest in handling payments for physical goods and services on its devices, according to people familiar with the situation.

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.

Paypal, traditionally, hasn't enjoyed overwhelming affection from customers. Square and Stripe, however, have been making inroads in recent years. Amazon is the king of online retail. Google has wallet and checkout and shopping. Personally, I can't wait. The sooner I can ditch my wallet and only have my phone in my pocket, the better. The question is — is this an area you'd like to see Apple get into? Given existing and other potential offers, is paying for anything and everything with your iTunes account an option you'd like to have?

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Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

Apple reportedly interested in handling mobile payments — Would you use iTunes over Paypal or Square?


I would. I love Square, but it's not in nearly enough places. I think that a lot of people know what iTunes is and it would be easier to integrate it everywhere. People who have Square accounts vs. people who have iDevices, if that makes sense.

Square not being in enough places seems like it's people and/or businesses not using the service, which in my mind isn't Square's fault. I have been using Square for the past three years for events I have organized for a writer's organization I belong to and for my business. I have never had an issue. That being said, I wouldn't mind seeing Apple get into this business because a lot of people have iPhones and iPods. I would definitely be interested in what they do and offer.

Yeah, I agree with you. I don't blame Square at all (sorry if it came across that way); I love the service, especially more so after their partnership with Starbucks. I've used it at work when ordering food and my coworkers don't have cash.

Thanks for your original comment and commenting on what I said. I'm glad you clarified things.

It's funny when banks try to get me to change from Square to their service. Their main point against Square is that there is no 24 hour customer service if you have a problem. In all my time using Square, I have never had an issue and have never had to call them.

The other point is the fees. Well, Square is still lower because if you add up the bank's percentage and the transaction fee it usually comes out costing a person or business more.

One bank even commented on Square's lack of branding. To me, their branding is fine. You can always tell a Square reader without any problem.

I would use this. I have always trusted them with my credit card info, where as, with Google, I fear giving them my credit card info. Pretty baseless for reasons, but I just "trust" Apple more than Google.

Also, and I can't find it now, but I thought I just read that Apple was rated the most secure online retailer. Odd timing with all these rumors if them moving into the mobile payment arena.

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Apple should add NFC to the next phone. When I had my galaxy nexus it was convenient using it at certain places. But now since I have the scanner on my 5s I believe that just adds a higher level of security. Apple is heading in the right direction. But they need to really evaluate this a lil while longer.

This may be the study you're thinking of:

It only addresses one narrow aspect of online security (and there are some good criticisms of the study in the comments section) but it shows Apple has the right attitude about protecting this kind of data.

As you say, we already trust Apple with credit card info -- in theory, extending this to mobile payments for real goods wouldn't be much different from buying a bottle of shampoo instead of an app via the iTunes store. Either way, nothing takes the place of paying attention to your bill every month and checking for fraud.

Yes, that is it. Makes sense why I had a hard time finding it. Wasn't looking for quite the right thing.

I think Apple and/or Amazon would be the ones who could push this.


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That said, I have started a process (slow, but moving) of having Safari suggest passwords and using them. My wife and I share the primary iCloud account, are all Mac/iPhones in the house, so it just makes sense. Additionally, though I have, in the past, used the same password for multiple sites, my iTunes/iCloud password is unique (not used on any other site) as is my gmail (same). So if my password is ever stolen from a site, they will never be able to use it to get my gmail (to reset a password) or iTunes/iCloud (credit card access)

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I don't like the idea of having a mobile payment system linked directly to my credit card as a simple extension to the card. It's hard to keep track of how much you are spending and where your money is going. I think a great idea would be if apple could somehow integrate some sort of tracking system to allow users to make and follow a budget system. So if you pay over a specified threshold in a specific category (say online shopping) you get an alert to ensure you stay on budget. Plus you could call up your spending report and see how your spending relates to your income, upcoming bills, etc. I would dive deep into the iTunes payment system if apple could give me something like this. If apple could simplify my personal budget so it "just works", I'd be all over it.

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I'd do it if Apple somehow reinvents the physical transaction experience. My pie-in-the-sky want is for my phone to completely replace my wallet. So an iPhone would act as a credit card, drivers license, insurance card etc. Apple would have to deploy some kind of wireless mobile payment hardware on the retailer side. So whether I go to a department store, restaurant, or DMV, all I need is my phone to buy a pair of jeans, a meal, or renew my drivers license.

Apple knows best?!... Apple's strategy ought to be: Try it and if it flops just say: "Rene recommended I'd do it." :)

Why do I love buying things on iTunes more than anywhere else? Because it's so easy my credit card info is already there and all I have to do is type in my password. Now I can just use my fingerprint making it even easier, faster and more secure. I also trust Apple more than companies like Paypal and other third parties. Apple's big name means they will do things properly and securely because if they don't the repercusions are great. I would love if Apple handled payments because it would simplify the whole process for me. Do I want them to be the only choice? no because with only one there is no choice. What I can't wait for is a future where I only have one account that includes my bank account info, credit cards, store cards, etc. This way it's one central location instead of seperated islands. Then all I have to do wherever I go is use one card, my smartphone or whatever but only one thing instead of 6 different cards.

I would be interested in such a thing, sure. Apple has become one of the few entities I do trust.

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It would welcome it, but being in that business is not as simple as saying we have a billion credit cards on file and have the hundreds of millions of devices that people can use to pay. Having that only means that they objective is to add another layer in the payment process.

Currently, as you use an issuing bank providing your card and keeping track of your balance. The vendor has their bank who receives credits for the transactions. In the middle are clearing houses like Visa, MasterCard and Discover - the folks whose logo is on the card.

Where's Apples role in this? Looks like a middleman that would only add cost to the process by takng their cut of the transaction fees. If they are going to do something it should be in the clearing portion of the transaction - something that PayPal and Square look to do and at a lower cost than the banks.

To be successful, Apple will need to build processing capabilities beyond what they have now. It's one thing to take an order for an app or song and charge a credit card the next day. It's a whole different thing to process a transaction (credit check, credit collection and credit payment) in a fraction of a second - the time you wait at a register.

If the can they have one final challenge - getting access to the retailers point of sale. Retailers in the US have been resistant to Chip & Pin/NFC style cards used in the rest of the world. They don't want to add the cost of adding and changing and the. Having to worry about what the new transaction costs will be by the up and coming transaction processor. While Apple will set up their stores as a demonstration, they have to prove to others that this is all worth the investment.

So, back to the original question - will I use it? Probably. Will it lower costs, be as efficient as today's process as well as being convenient? That remains to be seen.

I would LOVE for my phone to replace my wallet. Unfortunately, for that to happen I need to be able to use it EVERYWHERE. With so much money at stake (and there is a LOT of money at stake!) all we're going to get in the near future (5-10 years IMO) is proprietary systems. No one is going to want to give in, no one is going to want to give up their sliver of the pie.

I do think Apple should start w/ mobile/online payments. Give website owners the tools to accept payments the same way PayPal, Amazon Payments, etc. have.

No. First off i use my credit card most of the time. Interesting you have an image of a starbucks card. I reload that with a credit card and pay in the store with passbook or the app not paypall or square. As for services I do use paypal already for ebay purchases or websites i'm skeptical of. it's widely accepted. they've earned my trust. I have no need to change. If it ain't broke don't fix it is my attitude so i would not change just for change sake. I'm not the sort that will simply use something because it has Apple on it.

Definitely will consider using iPhone for payment because the other payments like google wallet and paypal hasn't come to this part of the world (Singapore) yet!!!!!

I would why not? I've been using iTunes for so long with my debit card and never had a problem. I'd trust Apple (and Google) before any other company.

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If Apple can provide a solution to waiting in lines to pay for stuff, I'd be all over it. Just scan with your iphone, authenticate with touch id and walk out. Stores would have some kind of checker like in costco to make sure you're not stealing stuff. Stores could save money by theoretically having fewer cashiers and customers would love the convenience. Win win... And win for Apple. I could see only 5s and later phones being supported as they have the fingerprint sensor, which would get a lot of people to upgrade.

This is a solution looking for a problem. There are a lot of payment options out there already and a middleman service opens up a few major potential issues.

1. Since with iTunes, a credit card is already attached to your account, should a merchant data breach occur, what is your limit of responsibility? The card companies protect you against unauthorized usage, but since you've authorize iTunes to use your card I would have to believe this protection would be void.

2. Many cards offer additional benefits like extended warranties and returns. Again, given that the relationship is between you and Apple, these benefits would also be void as they usually exclude intangible items. A transfer of money from your card to iTunes is considered intangible.

Personally, I do not want to see merchant costs go up, which would lead to retail prices rising, just for the convenience of having a middleman take their cut. No thanks.

Why would anyone use Apple or non-credit card services (e.g. PayPal) to pay for purchases?

Reason being is that many of the "premium" credit cards gives so much more added benefit than plain jane payments. For example, many of the premium credit cards gives you up to 1% - 2% on all purchases, air miles, doubles manufacturers warranty, price protection, travel insurance coverage, car rental coverage and others benefits at no charge. I get far more value in using my credit card than I would with a payment service like Apple. If and when Apple can provide the same services/benefits, I'm in whole hog.

Note: I do use PayPal for many purchases on eBay but the credit card company will not honour their services on those purchases as PayPal is an intermediary.

Apple is totally clueless regarding this. Other than the US, Europeans, Asians, and Canadians are all using NFC from credit cards, to debit card, to quick pay gasoline key chains.

I would never let my banking go through Apple, PayPal, or whatever. NFC and my bank directly. Anything else is unacceptable. But I work for a bank so I'm biased. ;)

Posted via the Android iMore App on BlackBerry Z30

Would close my Paypal account in less than a second!

NFC was a very not so funny joke brought to you by clueless people of google.

Posted via Apple Safari, the BEST browser in the world, with the most beautiful Apple Macbook 15" Retina early 2013.

Yes. I don't like Paypal's opaque and constantly changing fee structure and NFC is versatile and safe if implemented well. It has been used in Asia for years. It may not replace PayPal for cross border transactions as iTunes accounts are country specific, but it could be a useful addition.