January 27, 2014

According to a report in Friday's Wall Street Journal, Apple is preparing to make it's long-rumored jump into mobile payments.

The report cites anonymous sources who say the tech giant "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."

Also per the article:

"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."

This is big -- but hardly shocking -- news. From the moment Apple announced its Passbook app, industry watchers have assumed it was just a matter of time before the company pursued a full-fledged mobile wallet product.

If Apple gets into the mobile payments games, it would certainly get the attention of banks. Payments, with its generally low barrier of entry, is one aspect of financial services that nontraditional companies can compete in pretty easily.

But banks should take heart. Mobile payments, at this point, still require banks to be involved in the transaction. And other hip tech companies -- notably Google and its yet-to-take-off Google Wallet -- haven't exactly disintermediated banks out of the payments landscape.

Further, there have been many surveys released in the past couple of years -- several that we have reported on -- that indicate consumers still trust banks to handle their money as opposed to the likes of Apple, Google, and Amazon.

But, companies such as these have proven to be innovators time and again and their entry into financial services can't be completely dismissed. In 2002, when we were all just "looking things up on the Google," would you have imagined this humble search engine would have become the behemoth it has today?

So while I think it is unlikely Apple will be displacing banks anytime soon (or even if they would want to), given their far-extending reach and brainwashing (I mean, marketing), it's not too hard to imagine a day in the future when we're all sending money from our Apple Bank accounts via our iPad Sevens, which will be operated by our thoughts via the chip implanted in our brains.

[See Also: No Apple Mobile Wallet…For Now]

ABOUT THE AUTHOR
Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as ...