Earlier this week Apple announced it will soon be rolling out peer-to-peer payments, effectively (bad pun alert) swiping at services from Square, PayPal-owned Venmo, and giant banks that already let you pay friends through mobile apps.
Apple is well-known for biding its time while it watches other companies enter a market, then coming in later with a product or service it thinks will somehow be better. The peer-to-peer payments service is no exception; the question is whether Apple’s will actually be better than the others.
The short answer is we really don’t know yet. I only saw glimpses of “Apple Pay Cash” at WWDC this week, and wasn’t able to pay a friend through iMessage myself. But I saw enough to make me think that Apple has a very distinct advantage with iMessage, even though it’s limited to iOS devices. At the same time, Apple still has some important feature and naming decisions to make before it officially rolls this out in the fall.
Apple’s peer-to-peer payments are technically a functionality of Apple Pay, but they’ll happen in iMessage. As with Square Cash, the balances you carry from your peer-to-peer exchanges will live on a “virtual card,” called Apple Pay Cash. That virtual card doesn’t live in iMessage. Instead, it appears to exist within Wallet, Apple’s other app for keeping track of credit and debit cards, loyalty cards, and boarding passes.
So: the payments exchange is a function of Apple Pay, you’ll exchange the money in iMessage, and the virtual balance will live on the Apple Pay Cash virtual card in Wallet. I can’t help but think this should be less confusing.
Maybe Apple should create its own payments and money-tracking app that offers passcode-protected access to your billing information, cards, iTunes purchase information, monthly cloud storage costs, the peer-to-peer option, and a log of your Pay Cash exchanges. Kind of like ... a bank app. Or maybe not; maybe creating a separate app for services that already work invisibly is a step backwards, and iOS users will be just fine paying in iMessage. But if Apple has a grander vision beyond the virtual balance customers will soon be keeping on their phones — which I think it does — then a bank-like app is one place to start.
Another element of Apple’s new payments option that’s missing right now is the ability to write a specific memo of what you paid people for. Venmo’s open social network for payments is well-known; many users like Venmo for this reason. Square Cash’s ledger is private, but you still have the ability to later go back and see that I paid “$10 for pizza” or “$25 for pet sitting.”
Currently there doesn’t appear to be anything in Apple Pay Cash that lets you do this, aside from the iMessage exchange that you’ll eventually forget, like “Hey can you pay me $10 for that pizza?” There will be a log of the money exchanged, but not what the exchange is for. I suspect this is for privacy reasons — Apple has stressed privacy more than almost any other tech company — but I still think there needs to be some sort of option for this.
The most obvious advantage for Apple in all of this, though, is iMessage, at least in the US. While there’s a very valid argument to be made that Venmo, Square Cash, and big bank apps will still be more useful because they work on both iOS and Android, Apple doesn’t have to worry about establishing a network for peer-to-peer payments. The network for payments already exists among iOS users: iMessage. It will be right there in the native messaging app, and the people you’re chatting with are probably the same people you’ll want to pay.
You could make the same argument for Facebook and its Messenger install base. You can also argue that Square has a little Square Cash app for iMessage already. But Apple Pay Cash also has the Apple brand behind it, which people give their payment information to the moment they sign up for an iTunes account or set up Apple Pay. If Apple’s on-stage promise of ridiculously easy peer-to-peer payments pans out in real life, than a lot of iPhone users may find themselves becoming “P2P” people without even having to download a separate app.
Some of the initial reactions to Apple’s suggested payments feature, one that will subtly suggest you pay up if your friend happens to iMessage you a dollar amount, was that this will be awkward or rude. But to me it does seem smart, because it’s utilizing the intelligence on the phone in a way that I haven’t seen any other payment apps do yet. Think word suggestions in your messages, but instead of prompting you to type words, it’s reminding you to pay friends back.
A lot of people are already familiar with mobile peer-to-peer payments, but there’s also still a lot of room for growth. According to Javelin Strategy and Research, the number of US mobile peer-to-peer users will grow from 69 million in 2015 to 126 million by 2020; by 2021, one in two consumers are expected be using P2P apps. And that’s just in the US. What’s more interesting about most current peer-to-peer payments services is that they actually don’t make money for the companies that offer them. So the value of them, at least for now, is luring people in to use other services from the same company.
We won’t know exactly how convenient payments in iMessage and the Apple Pay Cash card are until it launches in the fall, and we’ll have to compare it to existing apps then. But it will have to offer a level of simplicity that other services don’t — whether in iMessage or in other areas of the payments service.