Apple’s P2P Service Lacks a Key Component: ‘Informal’ Engagement

  • Diana Asatryan
  • June 6, 2017
  • 0

Among the many innovative products announced during Apple’s WWDC 2017 yesterday (like this iMac Pro, or these cool smart speakers), the tech giant’s new P2P payments service got the FI spotlight.

Quickly dubbed “the Venmo competitor,” the new service will allow iOS 11 users transfer money via iMessage starting this fall. The product comes with its own digital debit card, Apple Pay Cash, which will enable users to store the funds they receive, and use it for purchases via Apple Pay. The debit card is backed by Green Dot, recode reported.

It’s still unclear whether the company plans to open up this service for Android users, or what the service will entail once fully rolled out. (Some clues below.)

But, given Apple Pay’s underwhelming adoption so far, is the new service posed to dominate the Venmo-Zelle world?

Not yet, according to Daniel Döderlein, CEO for payments systems provider Auka.

Apple is a latecomer to the P2P game, according to Döderlein, but the tech giant has a “a track record of perfecting inventions from others,” in this case from Facebook Messenger. But there is a key feature that Messenger has, and Apple is missing:

Remember Ping? No? You are not alone. The music-related social media platform from Apple never reached critical mass and was discontinued. Apple’s lack of informal engagement will be a challenge for their payments offering, as P2P payments happen primarily among people you socialize with. It’s closer to the informal — rather than the formal — you.

The “informal” messaging happens on platforms like Facebook Messenger, SnapChat, Whatsapp, or (for some) Google Chat. “So, it seems Apple is losing out on the social media side of things,” Döderlein said. Similar concerns were expressed for Zelle, the P2P payments network launched by Early Warning, which, compared to its to-be competitor Venmo, is missing the “social” aspect of transactions.  

However, Apple is well-positioned to go the banking track, with its more than 1 billion iOS users, and the growing digital wallet adoption (Apple Pay is posed to double by yearend 2017, this study suggests); P2P is just another piece to the bank puzzle. “Apple is not only starting to enable payments, but they are branching out from digital retail payments (Apple Pay NFC) to P2P payments, and more importantly, they are creating accounts, storing money and giving customers cards,” according to Döderlein “They are now many steps up the ladder to becoming a bank.”

And one of those steps is the partnership with Green Dot, which will allow Apple to issue and service its digital debit cards.

Pasadena, Calif.-based Green Dot has its own “innovation” track record: the lender has partnered up with Uber for instant driver payouts, Walmart for its MoneyCard savings card, and Paypal for My Cash Card program, among others. The bank has been consistently vocal about its efforts in the gig economy, and faster payments.  

However, this strategy may generally be risky for lenders. “The interchange earned by the issuer is lost. Banks will become the infrastructure for payment innovators, including the late bloomer, Apple,” Döderlein added. “Unless of course, the bank decides to compete, rejuvenates its technical ability and start to make products and services centered around its customers and their needs – this is the only way forward to stay relevant and generate revenue.”

But is being the “infrastructure” for players like Google or Apple such a bad idea?

3 - Readers Like This Post

Leave a Reply