Apple is reportedly in talks with partners to launch its own person-to-person payments service, extending the breadth of Apple Pay and closely competing with services like Venmo or Square Cash. Recode reports that the company wants to announce the payments-between-friends feature later this year — although plans can change.
Recode says that Apple has also held talks with Visa about the possibility of creating virtual Apple prepaid debit cards. This would allow users to spend the money they get from the new peer-to-peer payments service instantly without having to wait for the money to clear in their bank account.
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Essentially, the Apple prepaid cards would act as a proxy for the transactions taking place over Apple Pay. As Apple knows who paid who, it can temporarily foot the bill until all the backend payments clear.
The virtual debit card would work in retail stores and online. It isn’t clear if the prepaid Apple debit card would only be accepted at places that take Apple Pay (although that seems likely).
The idea of Apple Pay between friends has existed ever since Apple Pay launched back in 2014. The Wall Street Journal previously reported that Apple was looking to launch person-to-person Apple Pay mobile payments last year, although obviously nothing came of it.
Apple has also recently held discussions with Visa about creating its own pre-paid cards that would run on the Visa debit network and which would be tied to the new peer-to-peer service, sources told Recode. People would be able to use the Apple cards to spend money sent to them through the new service, without having to wait for it to clear to their bank account.
Users could then add the debit card, which may only come in a digital form, to their Apple Pay digital wallet to use for tap-and-pay purchases at brick-and-mortar stores. The card number could also be used to make purchases on websites and in apps.
Obviously, the peer-to-peer payments would only work between other Apple users as it will be tightly integrated into Apple Pay. Given the fact that iMessage and Siri already feature payment services from third parties, it would make sense that Apple’s offering would also integrate into its messaging and voice command services.
Apple is unlikely to charge end-users for sending money to friends but it may profit from the prepaid debit card transactions by claiming fees from merchants. The report says banks are uneasy about the idea of Apple launching its own bank cards who have a vested interest in them being the default payment method in Apple Pay. They are worried that Apple will give its own debit cards preferential treatment.
In terms of a launch schedule, the Recode report does not offer any guidance beyond ‘later this year’. Speculating, it seems likely that the feature would be rolled into iOS 11 and therefore could be announced in June at WWDC. Apple could wait and launch the feature at a later date, or scrap the idea entirely of course.