Beginning With An iWallet, Apple Could Revolutionize Personal Banking


Passbook could be a brilliant way for Apple to trump any other mobile payment option.
Passbook could be a brilliant way for Apple to trump any other mobile payment option.

There’s been a lot of talk over the past year or so about mobile payment systems and the concept of an iWallet. One of the challenges to any digital wallet concept is that it needs several components, most of which are provided by different companies and governed by different regulations. At a minimum, those components need to include on-device hardware, a mobile app or OS that can manage the transaction, a banking or credit card system that actually transfers money from your account to a retailer, support by major POS and cash register systems, and some mechanism for your phone to securely check-in with your selected account(s) to ensure money is available for purchases.

That’s a tall order and a lot of cooperation is needed when you have a different company providing each of those required functions. One way to simplify the process is to have one company deliver all or most of those functions on its own. There are few companies in the world that can pull all those capabilities together. One of them is Apple.

Apple is uniquely positioned when it comes to mobile payments. It designs and manufactures the iPhone, it creates and updates iOS, it can deliver any app that might be required, it already has an electronic payment system that it uses across its various online stores (iTunes, iBooks, and the Mac and iOS App Stores), and the company has been reinventing retail and payment technologies for over a decade in its stores around the world. The only things Apple is really lacking is support from merchant point of sale systems and broader access to your finances to facilitate choosing an account for payments.

That brings us to an important question: Do we want to provide Apple with that much information? Put a slightly different way, are we comfortable with Apple essentially acting as our bank?

The idea of Apple as a bank isn’t as far-fetched as it may sound. Anyone with a PayPal account and PayPal’s iPhone app probably knows that, in addition to transferring money to your PayPal account from your bank, you can deposit checks directly into your PayPal account by snapping photos of the front and back of the check. Similarly, PayPal is expanding into retail outlets and allowing you to pay by entering your mobile phone number and a pin code. Even before PayPal launched those features, it had already established its own debit and credit cards. Those are all common features that traditionally have been handled by banks.

Apple’s payment infrastructure has some of those banking features already, most notably the ability to link to a credit/debit card (or a PayPal account) and the ability to facilitate account funding in the form of gift cards. Funding an account with gift cards isn’t the same thing as depositing money, primarily because you can’t convert them back to cash, but conceptually it’s pretty similar.

A post on the IP Carrier blog notes that a survey indicated American consumers are very receptive to the iWallet concept and don’t have qualms about trusting non-bank companies with traditional banking functions. It also notes that mobile carriers and service providers in Africa frequently act as electronic payment and money transfer agents, making them de facto banking operations to some extent.

Closer to home, non-bank companies already handle some banking functions. GreenDot’s MoneyPak system enables users to place money into an electronic account for bill paying and debit card purchases. Walmart has introduced several key banking features in Walmat Money Centers in its store and online. Those features include check cashing, bill payment, money orders, and debit cards – all things traditionally done by banks.

Using those models and Apple’s existing infrastructure, the company could easily expand to offer some full-on banking capabilities like check deposits, multiple accounts for payments, and bill paying. Apple could also partner with a more traditional finance company to establish that functionality. The big question is whether or not we’ll trust Apple enough to play such a major role in our lives.

Source: IP Carrier