Industry analysts have recently discussed the potential benefits to Visa and Apple should the two collaborate on mobile payments, even stating their opinion that a “partnership could be on the horizon,” and potentially in time for the launch of the iPhone 6. Is this potential partnership already in the works or is it just speculation?
Apple and iOS products have a major market presence with a loyal user-base and many Apple-dedicated blogs, fan sites and rumor mills. Taking this into account, along with the fact that several earlier models of the iPhone were rumored and expected by many to include NFC, any predictions, expectations or speculations about Apple and mobile payments should be taken with a grain of salt. However, multiple signals indicate that a potential Apple-Visa partnership around mobile payments may be more than just speculation.
The possibility of a Visa and Apple mobile payments partnership made multiple media reports following statements from multiple industry analysts with different organizations. Josh Beck of Pacific Crest explained how news of recent changes and improved security with Visa’s systems could allow tech companies to grow and enhance their mobile payment initiatives. Roger Kay, analyst with Endpoint Technologies Associates, seconded that it makes sense for “Apple to have a partner for the back end,” and that Visa would benefit from partnering with Apple who is “so deeply entrenched with consumers.”
Let’s take a look at some of the assets already in place. Apple has their Passbook app, native on new iPhones, which supports a multitude of mobile functions such as coupons, ticketing and other convenient uses with iOS devices. Apple additionally has about 800 million payments on cards on file with their many iTunes accounts worldwide, while iPhone and iPad users have been shown to be more affluent consumers on average, spending more per transaction and overall than non-Apple device users. Visa has the payments experience offering a back end payments platform that his highly scalable, not to mention existing relationships with thousands of card issuers. The most recent asset, which spurred much of this potential partnership talk, is Visa’s new token service. This token can be stored directly on mobile devices and is used in place of the 16-digit primary account number (PAN), such that mobile POS transactions can occur without transmitting this sensitive information directly. Sensitive information such as the PAN needs to be stored in a mobile device’s Secure Element, which has created some barriers with facilitating mobile payments.
We may not need to wait much longer to find out if this potential partnership is anything more than just speculation. Beck, stated that this partnership, which makes “strategic sense” for both parties, could be announced in time for the launch of the iPhone 6. At the time of making this statement the iPhone 6 launch date was unclear, but Apple has very recently made plans to host a media event in San Francisco on September 9th, and although it has not been confirmed by Apple, it is widely expected that this will be the next iPhone’s launch announcement. The iPhone 6 is (once again) expected to include Near-Field Communication (NFC) technology.
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