Tim Cook hints that mobile payments are on their way

Madeleine Swain
29 January, 2014
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In Apple’s first quarter 2014 Earnings Call yesterday, Apple CEO Tim Cook played a couple of familiar tunes – being particularly keen to spruik strong sales of the iPhone in China and the advantages of Apple’s new deal with China Mobile, along with the old standard “We’re working on things you can’t see right now” – but he did let slip the first few bars of a slightly new song and many analysts have latched onto it with gusto.

The subject was mobile payments. And Cook confirmed what many have suspected for some time. That the ability to make payments by mobile technology was a large part of the thinking behind the Touch ID feature that appeared for the first time in the iPhone 5s. To date, officially Touch ID has been seen first and foremost as a security device, enabling iPhone users to access their phone’s operating system with merely a finger tap, rather than a swipe and/or passcode.

Using the feature to make payments is a whole different ballgame, but one that has been in Apple’s sights since at least 2010, says Darrell Etherington (writer at Gigaom, and now at TechCrunch).

And it seems Etherington was on the money. During the Earnings Call, Cook said, “The mobile payments area in general is one that we’ve been intrigued with. It was one of the thoughts behind Touch ID… it’s a big opportunity.” As TechCrunch reports, “Cook noted that customers have responded positively to being able to buy digital goods including music, movies and apps via Touch ID, and suggested that there’s potential for use of the fingerprint-scanning tech in other kinds of commerce, too”.

Apple consumers can already acquire accessories and cheaper Apple goods by using the Apple Store app, scanning barcodes of products and then completing their purchase via iTunes, in the same way that they can buy digital goods such as music and movies (which they can already do with Touch ID).

So using their mobiles to make other purchases isn’t such a great stretch. Just last week The Wall Street Journal reported that Apple is trying to find ways to expand this facility – enabling shoppers to make payments to third party providers of goods and services. ”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,” explained the WSJ.

It appears the Cupertino, California company has done some internal reshuffling with this in mind. “Apple has also reportedly shifted Jennifer Bailey, longtime vice president of Apple’s online stores, into a role focusing on building a payments business,” notes TechCrunch.

This strategic thinking also explains recent Apple acquisitions, such as AuthenTec, as well as recent patent filings such as this one, which covers a “method to send payment data through various air interfaces without compromising user data” or in plain English, “would allow its devices to securely store payment information, and then authorise purchases in a way that doesn’t convey any sensitive user data,” says TechCrunch.

The site also notes that moves to mobile payment capability are inevitable, considering Apple has a massive stockpile of consumer cards already on file. “It had 600 million users with credit cards on file as of late last year, according to analyst estimates. To put that in perspective, PayPal has around 137 million active accounts,” says TechCrunch.

All of this also perhaps explains Apple’s reluctance to incorporate NFC (near field communications) technology into iOS, despite expectations that it would. Many Android devices have utilised the feature, but as Todaysiphone.com notes, “The combination of iTunes accounts as an intermediary for payments and Touch ID for authorisation could make for a significantly more secure mobile payment system than existing e-wallets. The added security of Touch ID would no doubt be an attractive proposition for safety-conscious customers and might help in getting retailers and banks on board with the technology.”

The website concludes, “The question now seems to be when Apple will go ahead with a mobile payment system. When you think about it, all the pieces are falling into place nicely – millions of iTunes accounts, Passbook, iBeacons, Touch ID.”

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