The One Product That Makes Apple a Trillion-Dollar Company Overnight

At the risk of being rude: this is dumb.<p>Think about the implications here. Why should Apple get into payments? A business they have no expertise in, that is nothing like any business they have expertise in, and that is only barely tangentially related to products they make?<p>More so, payments is all wrong for apple. Payments is about boring stuff like consistency, robustness, and low overhead. That's not what Apple is about. Apple is about melding good quality software with compelling aesthetics and design. Because software construction is very difficult to merge well with aesthetics and design they have a key advantage over many of their competitors. And they use that advantage to make products that people are hugely enthusiastic about and willing to pay high prices to purchase, providing high profit margins to Apple. This is precisely the opposite of what's needed for payments. Apple would need to dumb a huge amount of money to develop a payments system, and it would need to grow a very anti-Apple sort of team within Apple to be able to be competitive. The chances that they'd screw it up and lose their investment are high. The chances that they'd ruin their brand and cause a diminution of their core business is also high (imagine if people thought about the Apple brand the way people think about Paypal, or Bank of America).<p>In short, this idea makes no more sense than saying that Apple should run a nationwide chain of taco trucks.

He gets into the "there's an app for that" mindset. Limiting factor there is having to get the iDevice out, turn it on, exit whatever app it was on, find the app, start the app, wait for the app to start, then do whatever is needed to approve the transaction. This must be simplified as far as possible; yes none of it is difficult, but to win it must be easier than a credit card's "open wallet, find card, grab card, swipe card[, sign here]" model. I don't know much about the state of the art in POS transactions, but do know to beat using my CC it must be no more than "grab device, wave near target[, clerk verifies picture]".

All they need to do is build a totally new business model on top of something that already only kindof loosely supports it!<p>SO SIMPLE!

Bank Account -&#62; Debit/Credit Card -&#62; Apple -&#62; Merchant = 10% loss to merchant.<p>Bank Account -&#62; Debit/Credit Card -&#62; Merchant = 1.5% loss to merchant.<p>Bank Account -&#62; Google Wallet -&#62; Merchant = 1.5% loss to merchant.<p>Bank Account -&#62; Paypal -&#62; Merchant = 1.5% loss to merchant.<p>Bank Account -&#62; Most payment startups -&#62; Merchant = 0.5% loss to merchant.<p>I'm pretty sure Apple doesn't take 10% in this environment.

If they buy Square, they'll be 30% of the way there with the infrastructure along with market penetration. Make the Square app a native app, and change it's name to iPay and you're golden. Also... no more dividends.

<p><pre><code> &#62; Remember, Visa and American Express still get their take and they &#62; still handle all the billing. Apple is just charging a convenience &#62; tax that would be well worth it to internet brands and retailers. </code></pre> One of the "Steve Jobs lessons learned" I read about was when they were behind in handling music on computers (unable to burn CDs on the iMac), they didn't just catch up with everyone else by just introducing a CD burner; they leapfrogged everybody by creating an online music platform in iTunes.<p>Similar for payments, what are the odds that Apple leapfrogs everybody and becomes the equivalent of Visa and Amex, taking it all for themselves? If they offered better discount rates, they could piggyback off of the existing credit card companies but encourage merchants to directly accept iPayments and get a few percent knocked off of the discount rate. For example, instead of N% for Apple's fee plus $0.30 and 2.75% for the credit card fee, it would be a flat N%, whatever value N is.

I've been thinking about Apple as a payment company for a while, and one roadblock that's occurred to me is this: I can't see Apple ever making an Android app. It will be tough to dominate the offline payment space without an Android app.

"If iPhones did just 10% of the revenue of movie tickets sold in the U.S. via this method, it would be $1.2B of the $10.17B spent in 2011 on tickets. ... That's a billion in pure profit."<p>So all movie theaters need to switch over to online ticketing, every ticket needs to be sold on an iPhone, and the credit card costs have to be neglible... but once that is done, a billion of pure profit!<p>Fandango isn't even charging 10% and they're the online ticketing company... think they are really going to give Apple another 10%?

<i>There's a reason why crack and apps are the same price</i><p>I don't think there's sound economic reasoning behind this.

&#62; Apple will sell $5B in apps this year and make $1.5B from their 30% stake. Almost pure profit, as the App Store can't cost more than $100M to operate. In fact, the marketing of the App Store is probably 10x the cost of running it (someone in advertising please fact check my ass on that one).<p>It has been widely suspected that the App Store and iTunes are loss-leaders for Apple. The company itself has reported that it ekes out a profit from those divisions. The App Store and iTunes exist to sell iOS devices and Macs.<p>A payments API makes sense just like the in-app purchases API does. This is a lot of hand-waving for something that has probably always been on the table.

Tiny correction: As of March 2011, iTunes has 200 million credit cards.<p><a href="http://techcrunch.com/2011/03/02/apple-200-million-itunes-accounts/" rel="nofollow">http://techcrunch.com/2011/03/02/apple-200-million-itunes-ac...</a>

this article is the epitome of someone with too much disposable income and time. Who tries out a new app a day, and how can you really find any utility by giving a new app a day a try ? Paying $3-5 a day on an app really ?

It's a little baffling how he thinks that Apple might charge up to 10% to handle payments when they already charge 30% for handling payments.

"Start doing the math and it gets scary: Apple would have massive margin, and vendors who didn't accept iPhone payments would be at a massive disadvantage..."<p>That's if we do Jason's bad math. His assertion that X% of $Y billion market is pure profit assumes that 100% of the X% of mobile are iOS purchases. Even still X% must be further drilled down to Apple's actual cut. So, assuming Apple could take 1% of the $600B restaurant market and facilitate $6B in transactions, their cut assuming his crazy 10% transaction fee would be only $600M. Common jCal sensationalism.<p>I'm the furthest thing from an Apple analyst, but it seems that all "built-in" Apple things like iCloud, the App Store, etc. are not simply cheap entries into a market to make money. Each deeply complements and satisfies a fundamental need with a piece of Apple hardware. A payment application of this nature doesn't seem to sit quite at the "essential" level of Apple's other apps/services.

Actually, there are movements already in place by carriers to do the same thing, with many of the larger carriers setting themselves up as banks with regulators well in advance of this strategy.<p>While Apple could introduce a complete payments solution in house (arguably they already have), it's still only in goods you'll buy from an apple platform, and if they gouge too much, it will open it up for disruption by someone else.<p>Commerce and payments will always be tied to the frictionless exchange at the point of sale, and while iphones could easily transition into iwallets, the carriers currently have the upper hand, as they're sitting in the same position, and many are somewhat platform agnostic.<p>There might be an app for this, but i'm not sure it's Apple's best play....yet.

Apple's patent for iWallet: <a href="http://www.patentlyapple.com/patently-apple/2012/03/apple-wins-patent-for-iwallet-the-one-that-will-rule-the-world.html" rel="nofollow">http://www.patentlyapple.com/patently-apple/2012/03/apple-wi...</a>

Can we please never, ever link to a blog post that mentions neuro-linguistic programming in its content ever again? I mean, seriously. That completely lost me right there. The author totally discredited himself.

What's to stop Facebook from going after this exact same space? Frankly, I'd be surprised if they weren't already working on something to this effect. Via Facebook Connect, they've already got the back-end infrastructure "trojaned" into a large percentage (maybe even a majority?) of all iOS apps, web apps, sites, and so forth. Feels like they could carve out a more defensible and expansive position in web <i>and</i> mobile payments than Apple could.<p>[To be fair, they don't currently have all the stored credit card info that Apple does. So that's a big hurdle to starting up.]

I thought this was going to be about an apple printer...

I think he's getting this idea from Asian countries where their payment information is linked to their phones, so that they can make purchases with the swipe of their mobile device. I think we're heading in this direction. Google Wallet is already thinking like this. It's not too far of a leap to think Apple will do something similar.

I ha

I love my iPhone. As an appliance it works great. But I must be in the minority when it comes to using apps. I use two, maybe three, on a monthly basis. Safari, Maps, and sometimes a weather app. I was floored when he said he spends $50-$100 a month on apps. What is he buying?<p>Also - is there a huge market for mobile purchases? I must be getting old, but I certainly prefer buying things online on a laptop or a desktop.

wow, people really buy 3-5 apps a month?<p>i set up my phone with a few apps (2 or 3 paids) and never think about it again. Let alone 3-5 times a month.