In April of 1976 when Apple launched, the concept of mobile payments wasn’t even a speck on Steve Jobs’ radar. The internet wouldn’t launch for more than a decade, cell phones weren’t in everyone’s hands, and the concept of a smartphone was farfetched. Fast forward 40 years, throw in the concept of payments API, and that once tiny tech company had finally made a name for itself in another industry: digital payments.
For decades, the tech ecosystem was hyper-focused on building better computers, launching faster internet browsers, and coming up with the best cell phone in the market. Quickly, the industry became saturated with plenty of other players, causing companies like Apple to continually pivot. Eventually payments API became a driving trend in the space. And then, in October 2014, Apple decided to jump on the mobile payments bandwagon with the launch of Apple Pay.
Thanks to innovations in payments API, which enable developers to seamlessly integrate new tools and solutions into a company’s payments platform and processing systems, Apple and the tech industry were ready to disrupt the world of payments in such a way that skeptics didn’t think the world was ready for.
To some degree, those critics may have been right. Then again, Apple was the company that put mobile payments on the map — even if it was just to get people talking about how to use tech to create better payment experiences.
Apple Pay Cash: The Next Generation of P2P Payments
During Apple’s latest series of announcements at its WWDC conference, Apple showed its mobile payments hand and why it wants to continue being viewed as a serious player in the space. On June 5, Apple announced Apple Pay Cash, its jump into the world of P2P payments.
Launching its counterpart to PayPal’s Venmo, Apple Pay Cash is a digital debit card that works via its messenger app to allows people to send friends and family money. This money transfer service isn’t the first of its kind, but with Apple’s name behind the service (and the number of iPhones in circulation), it could be a game-changer for P2P payments. It’s also a good indication of how the payments API ecosystem is going to continue to evolve as the app economy expands.
What’s really going to make Apple’s payments plans tick is the ability to integrate them into more and more apps, across many businesses and across multiple devices. This is made possible, of course, thanks to innovation in payments API that allow developers to onboard mobile and P2P payment solutions easier and faster than ever before. This has caused more businesses to find value in integrating digital and in-app payments.
What Apple’s P2P Launch Means for Payments API
One of the biggest key takeaways from Apple’s latest launch is that it’s hyper-focused on driving innovation — through both tech and payments (and merging the two concepts together). Whether that be through advancements in how payments API empower better experiences for their customers by taking friction out of any process, or through new apps and payments tech, Apple’s strategy has been about integrating its tech into everyday tasks of people’s lives.
As Payline’s Chief Strategy Officer Steve Blentlinger reminds us, Apple Pay Cash has been a rumor for nearly two years, calling the latest launch “very Apple-esque.”
“Apple built one of the most valuable companies in the world on a laser focus on innovation through customer experience. So why would they get into payments with Apple Pay and then why Apple Cash? It’s simple: customer experience. People don’t want to deal with banks, credit card companies or even do simple things like balance a checkbook,” Blentlinger said. “Consumers want to consume. Period. They want an experience.”
Similar to other payments innovations that traverse the tech and commerce ecosystem, consumers expect better experiences. What consumers also want our of their payments experience is the ability to have services like Apple Pay Cash that provide a seamless and ubiquitous experience to sending and receiving money. From a developer’s perspective, having investments in this type of tech will continue paving way for payments API to help other companies onboard these solutions into more software and apps.
Of course, there will continue to be plenty of challenges along the way — as demonstrated by the many startups in this space that have fizzled out in the past few years because they couldn’t find the answer to one key question: how can P2P payments be monetized? With more discussions focused on the value of a payments API, this question can begin to be solved.
Perhaps this is why Apple has treaded lightly into the payments space, waiting nearly three years after Apple Pay’s launch before making Apple Pay Cash a reality — despite the fact that Venmo was well established in the marketplace. Still, Apple’s biggest hurdle yet could be that it has made this feature exclusive to the latest batch of Apple users.
“The details here seem to indicate a system that requires users to access a prepaid account — even if they have already added a payment card to their Apple Pay wallet — and then only send and receive money to other iOS 11 users,” James Wester, research director of worldwide payment strategies at IDC, was quoted as saying by ZDNet. “That really limits the utility of the system and requires a user to manage yet one more account instead of eliminating accounts.”
Apple, Tech, and Payments API Innovation: Connecting the Puzzle Pieces
When talking about payments innovation and what’s going to make the mobile payments tide turn, there’s one word that’s come up time and time again: ubiquity. Although Apple’s payments API enables developers to onboard Apple Pay into their own apps, there’s a bit of a disconnect in the market with Apple Pay and the many consumers who don’t have an iPhone or an Apple product. This is something critics have suggested Apple needs to overcome.
The other risk, as pointed out by Blentlinger is the fact that there is plenty of risk that comes with monetizing P2P payments. Because these services are offered for free to the consumer in order to boost adoption, it leaves Apple up to deciding who pays the interchange costs for credit cards. Plus, you have to convince consumers there’s value in using the app.
“Payments is difficult for many reasons… Add the social aspect of P2P, and it becomes a nearly impossible puzzle. There are not a lot of payment problems left to be solved. Most of what you will see in the near term is business model innovation. Cash is still king. Nothing is faster than handing a buddy or a merchant $20. Any P2P solution will never be faster than cash, or more secure, or as anonymous,” he added.
Still, when it comes to payments innovation, it’s clear that Apple has been a major player contributing to the discussions being held today. Across the tech ecosystem, Apple’s decision to become a payments player has gotten other companies thinking how, and if, P2P is the right strategy. Moreover, it’s paved the way for companies to pitch payments API as a necessary technology in any commerce experience.
Why? Because without a payments API, integration and onboarding the latest and greatest payments innovations would not be possible. For Apple and the major tech players’ innovations to really take off, it requires that developers be equipped with the right tools to integrate payments into their own apps and solutions.
As for what’s next? Blentlinger is bullish about Apple’s latest adventure.
“Apple Pay Cash is the future. Apple may not be the complete stack, but they have some of the best odds at being the private initiative that pushes towards the digital revolution. Look at how mobile phones have adopted biometrics. Apple now has a service that integrates payments to merchants online and in person and payments to friends,” Blentlinger said.
One of the biggest successes he points to is Apple’s ability to seamlessly integrate into iMessage, which should help draw some P2P customers away from other popular services like Venmo or Chase QuickPay.
“I’m all-in on putting my chips on Apple now. They are figuring out how to put their $200B war chest to work and building a platform beyond apps and phones. They are becoming a platform for commerce and finance, maybe even for life,” he added.
His thoughts have been echoed across the industry. ZDNet Editor-in-Chief Larry Dignan provided some WWDC analysis, indicating his prediction for how Apple plans to monetize the service: “Apple Pay will be more integrated and easier to use with iMessage integration… You can see the connective tissue here as Apple profits from the handoff from Apple Pay to internal maps to closing sales and collecting fees.”
Once major players like Apple begin to monetize mobile payments, social payments and P2P, it begins to paint a clearer picture about the future of payments API and the value of ingratiating solutions that offer a frictionless, ubiquitous, and seamless experience for both the end-user. That’s the type of experience consumers are expecting — and the type businesses should deliver.
Anna Lothson is a content contributor for Payline Data. She previously wrote for PYMNTS.com, as a Sr. Content Producer, where she focused on financial services and payments innovation, fraud and security, emerging payments, and FinTech news, research and thought-leadership content across the payments industry.