When Apple makes its long-awaited plunge into mobile payments, it is more likely to create a closed system for Apple customers than a truly open mobile wallet for all consumers, a new study from Celent says.
Admitting it does not possess any inside information from highly secretive Apple, research firm Celent's new report offers its "educated guess" as to how Apple is positioning itself for a future in payments.
"The key hypotheses that I haven't seen much discussed elsewhere is this notion that Apple will start with providing payments for their devices only," says report author Zil Bareisis, a London-based senior analyst for Celent.
Speculation about Apple's road to mobile payments picked up steam last month when the Wall Street Journal reported the company had given Jennifer Bailey, a vice president of the company's online stores, the task of building an Apple payments business.
Apple is already in the payments business with its iTunes media store, which handles payments for digital content sold on its iPhone, iPad and Mac products. Apple also created the Passbook app, which collects other mobile wallet apps, and stores payment credentials in its iCloud keychain.
Those assets, in combination with Apple's TouchID fingerprint scanner on the iPhone 5s, provide the technology groundwork for a more complete payments system, Bareisis says in the report.
After establishing a mobile payment system for Apple device users, the company would likely "try to do payments facilitation online" and then move on to payments for physical goods, Bareisis says. In the future, Apple could potentially expand its services for "payments disruption," Bareisis adds.
Apple could possibly leverage its AirDrop technology, which allows users to share photos, videos, websites and other material with nearby iOS 7 devices, into a person-to-person payment platform, Bareisis says.
In addition, Apple's Bluetooth Low Energy system, iBeacon, can be configured to support multiple applications from marketing to payments.
Apple Inc. has 5,960 entries in the U.S. Patent and Trademark Office database, though not all relate to payment systems, the report states.
The first "natural step" for Apple to expand payments beyond its own customers would be to bring online merchants into the fold, the report adds.
Adding a "Pay with iTunes" button to the merchant's checkout pages, similar to a "Pay with PayPal" button would be a viable choice for Apple.
PayPal has already expressed an interest in partnering with Apple, Bareisis says. PayPal was willing to offer its platform capabilities, anything from fraud detection to back-end infrastructure, even possibly down to processing of payments, on a white-label basis, he adds.
Apple can handle payments for more merchants by bringing them into the Apple ecosystem in the same manner their customers can currently subscribe and pay for a Netflix movie rental subscription through Apple TV.
In creating a "Pay with iTunes" or a "Log In with iTunes" service that could plug in to other merchant websites and apps, Apple would have to ensure it could effectively compete with payments services from companies such as Braintree and Stripe, Bareisis says.
Other options include building on the iCloud Keychain or storing actual payment card inside the Passbook app.