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  • Thierry Spanjaard

Apple enters P2P payment grounds: an attempt to be everything to everyone?

At the end of last week, Apple announced Apple Pay Cash, marketed as a means to send and receive money with Apple Pay. The company is the latest to enter the already crowded arena of P2P payments. For the time being, Apple Pay Cash is restricted to the United States, but one may expect the company to deploy it globally.

Apple introduces Apple Pay Cash both as a means to simply send money to friends through their own Messages app, and as an extension of Apple Pay allowing payments in stores, in apps and on the web. This way, Apple, on one hand, tries to expand its role in traditional consumer to business payment and positions Apple Pay Cash as a direct competitor of the established leaders in P2P payment.

Apple also issues an Apple Pay Cash card linked to the user’s Apple Pay Cash account. Users can transfer money between their Apple Pay Cash account and a regular bank account. With this, we can consider Apple Pay Cash is just a nicely designed and marketed incarnation of the electronic purse concept that has existed for years.

The consumer to merchant payment ability of Apple Pay Cash can be seen as a natural extension of Apple Pay. In fact, Apple Pay Cash just adds a prepaid purse capability to Apple Pay, which already supports credit and debit cards. The typical business model in prepaid purse payments is that the operator of the system makes profits from two main sources: financial interests brought by owning the float and the funds abandoned by their legitimate owners.

In the P2P payment arena, Apple Pay Cash is facing well-established heavyweights: Paypal, Venmo (belonging to Paypal), Zelle (managed by a consortium of leading American banks), and also Facebook Messenger and even Snapchat! These solutions meet consumer adoption as 47% of Americans have already used a P2P payment app according to Identity Mind Global. The only issue in the P2P payments business is its profitability! The rule has been established that P2P payments between friends, family, or anyone who is not a merchant are free. The development of P2P payments requires growing computer power and security expenditures from the app operators while no revenue can be recognized to compensate for these expenses.

So, what is Apple goal in getting into this business? As it has already been demonstrated that Apple Pay is an insignificant contributor to Apple profits, one may wonder why the company is persevering in the same direction by extending its offer. Also, the industry is always in search of the “killer app”, but we may wonder if the ability to pay is compelling enough to drive non-Apple users to spend hundreds or even more than a thousand euros (or dollars) to purchase an iPhone.

Another option is that Apple wants to make its smart phones always more vital in our day-to-day experience. Apple Pay Cash is nicely integrated with others company concepts iMessage, Siri, iCloud, Touch ID, Face ID, providing a seamless experience to users. Paying in shops and paying friends and acquaintances is part of our day-to-day life, and, as such, the Apple smartphone should be the privileged way to do it, according to the company strategy. Also payment, be it consumer payment or P2P payment is an endless source of behavioral data. Being present in all the compartments of our life makes Apple even more able to gather data and the use it for its own marketing and the one of its partners.

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