Reports indicate that Apple is considering developing a money-transfer service. Sources say that the Cupertino, California-based tech giant has held talks with partners in the payments industry about such a move. With the money transfer service, owners of iPhones would be able to transfer money to other owners of iPhones. It is understood that the money transfer service could be launched later in the year.
This is not the first time that Apple has considered launching a money transfer service as it previously was contemplating that in 2015 when it held discussions with banks. However, the talks did not materialize into anything tangible.
If Apple goes ahead to launch the money transfer service, it will find an increasingly competitive space with players ranging from large American banks to purely online platforms such as Square Cash, PayPal and Venmo. The latter, which is a subsidiary of PayPal, is popular with millennials and is recording rapid growth. Last $17.6 billion was transferred on the platform.
Currently, most of the services have been losing money but that could change in the future as these could become the ‘banks’ of tomorrow as traditional banking gets upended and these services start offering additional personal finance services and solutions.
Apple-branded Visa card
It is also understood that Apple is considering having its company-branded pre-paid card and has already held talks with Visa. Sources say the service will most likely also be tied to the money transfer service. This way users would be able to access the money transferred to them on the Apple Visa cards and therefore avoid delays that would be occasioned by waiting for the money to be credited to their bank accounts. Before using the Apple Visa card, users would however have to link it with the Apple Pay wallet. The Apple Visa card might not necessarily be a physical one and could be in digital form.
According to sources, Apple’s strategy is to boost Apple Pay usage as activity has been lower than initially anticipated. Gene Munster, an Apple analyst recently disclosed that his estimates for the value of Apple Pay transactions in 2016 was $36 billion. This was just a fraction of the $207 billion he had earlier predicted. Some of the reasons inhibiting its use is the fact that Apple Pay is not universally accepted in brick and mortar stores. It also lacks a compelling differentiating factor from physical cards.