If Apple Inc. wants to make a strong move into mobile payments, it could do so by transforming its iTunes database into a payment and loyalty program, a recent industry report says.

Apple has already made several tentative steps into payments. Its Passbook wallet, unveiled last year, doesn't enable payments on its own but supports other payment apps that run on Apple devices. Apple also offers digital and plastic gift cards for use in its stores and online.

"Apple has dipped its toe in the water [of payments] and will continue to build out its mobile wallet this year and, in our opinion, could develop a closed-loop loyalty program for Apple products," says Royal Bank of Canada Capital Markets LLC analyst Dan Perlin in a January report outlining the financial outlook for payments companies in the coming year.

An Apple loyalty program could potentially be called iPoints, Perlin wrote.

Such a program would potentially bring revenue from the 400 million payment card accounts Apple has on file for iTunes purchases alone, the report says.

Others have speculated that Apple intends to include a Near Field Communication chip for payments in an updated iPhone 5 model, possibly this summer.

Regardless of what Apple does next, other companies are moving ahead with their own products.

PayPal Inc. has established itself as the only major player capable of creating its own funded network to bypass Visa and MasterCard, the report says. However, it is likely that PayPal will align itself more strongly with Discover Financial Services "to satisfy the need for credit and broader-based rewards," Perlin says.

PayPal and Discover announced a partnership last year in which Discover's network would route PayPal point-of-sale payments for authorization and processing from merchant terminals accepting Discover. This arrangement is planned to take effect in the spring.

For its part, Discover could gain market share against Visa and MasterCard by using "PayPal's brand as a Trojan Horse" to attract more merchants and consumers, the report says.

Toronto-based RBC Capital Markets also predicts that Discover and PayPal will eventually announce a co-branded credit card. This move could lower PayPal's funding costs because Discover would likely offer a lower interchange rate for PayPal when loading funds from a Discover card.

Similar speculation popped up late last year regarding Google Inc. possibly creating a branded plastic payment card with Discover, but RBC Capital says Google appears more interested in capturing consumer account and transaction data to bolster its advertising model.

The RBC Capital Markets report did not name the Isis Mobile Wallet as a major player, saying, "it is just trying to remain relevant and have a place at the table with its consumer wallet."

Isis, a joint venture of AT&T Mobility, T-Mobile USA and Verizon Wireless in the U.S., launched its test period in Salt Lake City and Austin, Texas in October.

However, in an indication Isis intends to strengthen its position, Incipio Technologies announced last week it was working with Isis to provide an iPhone carrying case that would include an NFC payment chip and the Isis wallet application. Without such a product, Apple's devices could not support Isis payments.

While the Merchant Customer Exchange joint venture amongst major retailers in the U.S. revealed more information this week about its mobile-pay plans, the RBC report says the venture's ultimate goal is to "use collective bargaining to lower prices" merchants pay to the card networks. 

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