Apple brings biz payments to iMessage, painting a target on Facebook Messenger

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Apple is not going to sit idly as Facebook transforms its Messenger app into a platform for P-to-P payments and commerce.

Apple plans a feature that will support direct chat between consumers and businesses through its iMessage platform. Called Business Chat, it has been in development for about a year and will be available this spring as part of the public release of iOS 11.3.

Apple's iMessage is a closed ecosystem, but one that spans the company's range of devices including iPhones, iPads and computers. Consumers can use Apple Pay within a chat session with a service rep, and will be able to make appointments or perform other tasks pertinent to that businesses from within iMessage. Initial supporters include Discover, Hilton, Lowe's and Wells Fargo.

Apple did not return a request for comment by deadline. One of its partners, Discover, was already working with Apple on its Venmo alternative, called Apple Pay Cash.

Apple Pay Cash also works with Green Dot, which is the program manager for a virtual debit card that consumers use to fund Apple's P-to-P transactions. Apple Pay Cash is issued on the Discover Network, which makes Apple Pay Cash available at merchants that accept both Apple Pay and Discover. That gives it coverage at more than 90% of the merchants in the U.S.

"Apple Pay Cash is an alternative to bank-issued cards," said Richard Crone, a payments consultant. "The move will propel the use of Apple Pay Cash specifically as a new tender type."

The update places Apple directly into battle the brands that use Facebook Messenger. The social network already works with PayPal to embed transactions and customer support in Facebook Messenger. PayPal wants to expand its Venmo social P-to-P unit to broader use cases such as retail and consumer-to-business payments, which could benefit from the tie to Facebook Messenger.

There's some urgency for Apple, given Facebook is in the market first and also recently added retiring Amex CEO Ken Chenault to its board, in part to draw in Chenault's experience to improve Facebook's performance in customer service and direct commerce. Apple is also providing an iOS counter to WhatsApp's recent Android business messaging app and Google My Business's chat feature.

Both Apple and Facebook have huge user bases, providing a base to bundle customer service, purchases and other business services inside of messaging.

"Messaging platforms are certainly going just beyond the 'social' function and are rapidly becoming a hub where customers can discover new products and can interact with the business without going to the specific apps," said Zil Bareisis, a senior analyst at Celent. "To complete the transaction, a smoothly integrated payments capability is essential. That's why you see Facebook partnering with PayPal and Apple extending Apple Pay to its own Messenger."

One of the immediate impacts will be a way for consumers to use their Apple ID to pay bills with a slicker experience than bank-powered internet bill payment.

"It is a form of internet bill presentment and payment without all the complications and hassles of bank bill pay. You open up iMessage … and it has already authenticated you," Crone said, adding Venmo and Facebook Messenger can also provide this capability. "Bank bill pay has no real-time dialogue."

There's also a "reach them where they live" pressure on businesses that should lead them to Apple, Facebook or both for messaging services.

Consumers prefer text messaging over vocal communication, according to CPI, which found more than 80% of American adults use messaging, making it the most common smartphone activity. The research also found it takes an average of 90 seconds to answer a message, opposed to an average of 90 minutes for email.

In pushing its own B-to-C payments/service message combo, Facebook cited research that found 56% of consumers would rather message than call customer service, 61% like getting personalized messages from business and 67% expected to message businesses more often in the future.

"B-to-C and C-to-B applications are growing organically within these platforms and the providers are now just formalizing it," Crone said.

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