Apple Begins Rollout Of Mobile Wallet Functionality With Passbook App

Most of the major internet companies are either actively in market with mobile payments or flirting with the idea. This includes Google, eBay/PayPal, Amazon and Facebook with Credits (there’s an article to be written about the future of Credits). And there are scores of startups and others also competing for consumer attention and merchant adoption of their mobile payments systems: Square, Intuit, ISIS, Groupon, Visa, FirstData, LevelUp, Jumio, Card.io, Boku, Tabbedout, GoPago and many others.

The list grows longer by the week it seems. Joining that list, as of yesterday, is Apple — almost.

At the WWDC event yesterday Apple introduced a mobile wallet app called Passbook. It doesn’t have a stored credit card like Google Wallet but it puts airline boarding passes, movie tickets, coupons, loyalty cards and gift cards in one place on the phone so they can later be scanned at the point of sale. According to press materials, any retailer or third party developer will be able to integrate with Passbook.

It’s also time and location enabled so the relevant passes or cards pop up on the iPhone home screen, triggered by physical location (at or near the store) or the time to depart (in the case of a boarding pass).

Apple’s CEO Tim Cook said yesterday that Apple now has 400 million consumer credit cards on file. That’s at least double the number of active accounts on PayPal or Amazon today.

The next question is whether (or perhaps when) Apple will go all the way and get into mobile (credit card) payments explicitly. To do that it would need to have technology that could integrate with current POS machines and capabilities. Alternatively it would have to create the new infrastructure as some companies are now trying to do with iPad POS systems.

Startup LevelUp uses a stored credit card to generate a barcode that can then be scanned at the point of sale. This approach works today and could be used by Apple. Indeed, that’s the system being used in Passcode.

Google’s forward-looking NFC Wallet has not taken off notwithstanding the growth of NFC-enabled payment terminals. By most accounts NFC payments are a few years away from mainstream adoption in the US. The next iPhone may get NFC (or the one after that), which would make it mobile payments ready at numerous retailers across the US.

Apple iPhone owners could simply opt-in to associating their stored credit cards with Passbook and then payments could be transferred to the retailer or merchant (via barcode or NFC, etc). But how would Apple handle transaction fees and customer service issues? There are a bunch of “plumbing” and infrastructure issues that currently hold the segment back in general.

There is also considerable consumer ambivalence in the US about mobile payments today, as several recent consumer surveys indicate. However among several categories of companies that include Google, credit card issuers and mobile carriers, Apple is most trusted to manage mobile payments.

Source: Retrevo 2011