Apple Pushes Deeper Into Mobile Payments Tech Giant Lays Groundwork to Expand Service for Physical Goods

Apple Pushes Deeper Into Mobile Payments

Tech Giant Lays Groundwork to Expand Service for Physical Goods


Jan. 24, 2014 7:43 p.m. ET

Apple Inc. AAPL -1.14% is laying the groundwork for an expanded mobile-payments service, leveraging its growing base of iPhone and iPad users and the hundreds of millions of credit cards on file through its iTunes stores.

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.

In another sign of the company’s interest, Apple moved Jennifer Bailey, a longtime executive who was running its online stores, into a new role to build a payment business within the technology giant, three people with knowledge of the move said.

Those people said Apple also spoke to at least five other well-known executives in the payment industry about the position before tapping Ms. Bailey.

An Apple spokeswoman declined to comment, and declined to make Ms. Bailey available. Ms. Bailey didn’t respond to requests for comment.

A payment service would launch Apple into what is becoming a fierce battle over how people pay through mobile devices. Other players include eBay‘s EBAY -1.82%PayPal unit, Google Inc. and startups such as Square Inc. and Stripe Inc. Forrester Research estimates that Americans will spend $90 billion through mobile payments by 2017, up from $12.8 billion in 2012.

Just this week, Stripe said it received $80 million in funding that valued the four-year-old startup at $1.75 billion. The same day, activist investor Carl Icahn called for eBay to separate PayPal, which he called “a gem” of its business, into an independent company.

Mr. Icahn also owns a stake in Apple, and has been pushing the company to return more money to shareholders. In a letter to Apple shareholders Thursday, Mr. Icahn urged the company to invest in mobile payments. “We believe a revolutionary payments solution is now a very real opportunity that the company could choose to pursue,” Mr. Icahn wrote.

Currently, Apple handles payments for movies, books, and music purchased through its iTunes store. Consumers can also buy apps and pay for items such as digital goods within an app through an iTunes account.

In its retail stores, Apple allows shoppers to pay for some products by scanning the item and paying with a credit card tied to iTunes. It has introduced new technologies that could allow for paying through an iPhone, including a fingerprint reader for security and an iBeacon location-sensor that detects when someone is nearby.

However, Apple doesn’t allow consumers to pay for physical goods and services, such as shopping for clothes or hiring ride-share service Uber, using an iTunes account. Users still need to input the credit-card information manually, an extra step that often deters purchases on smartphones.

The potential for Apple is enormous—the company said last year it had 575 million registered users with its iTunes store, and it has sold roughly 375 million iPhones over the past five years and about 155 million iPads since its 2010 debut.

“Apple is absolutely the sleeping giant in the payments world,” said Denee Carrington, analyst at Forrester Research. “They have the capability; they just haven’t tied it all together.”

The Journal reported in 2012 that Apple had studied ways to break into payments, going as far as working on a “wallet app,” before scaling back ambitions over concerns that customers might blame Apple for a bad experience with a merchant. In April 2013, Mr. Cook told investors on a conference call that mobile-payment technology was “in its infancy.”

Speculation about Apple’s interest heightened earlier this month with the disclosure that Apple had applied for a patent covering payments for goods through a signal sent from a phone to a wireless receiver. The patent could indicate an interest in letting iPhone users pay for goods in stores through their phones. It isn’t clear what Apple’s exact plans are or how far along it is in its strategy.

Apple could offer iPhone users the option to fill in credit-card information automatically based on a card already registered with iTunes. Another possibility, raised by one industry executive, would be to reduce fraud by using an iPhone’s fingerprint reader before completing an online purchase.

“If Apple is in the game, it certainly changes the space and would make merchants think differently about who to partner with,” said Ms. Carrington.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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