
Analysts claim that if Apple does get into person-to-person money transfers via Apple Pay, the company stands to lose money on each transaction in the short term. That being said, the company is willing to accept the losses as a way to drive adoption of its mobile payment service. To be more specific, setting up and validating a new account could cost Apple anywhere between 50 cents and $3, on top of which Apple would have to pay at least 25 cents per transaction. Generally speaking, companies such as PayPal don’t generate much revenue from person to person transfer instead pulling money from business transactions instead.
Any involvement in P2P transfers would likely be a means of encouraging Apple Pay adoption with the hopes of the increased usage spilling into retail. Research firm Crone Consulting speculated that adding P2P could double usage of Apple Pay by iPhone owners within 18 to 24 months. This is because P2P services tend to be a “viral” application which means that someone sent cash through an app often has to register with the same app to receive it.
The Cupertino California company was reported to have spoken to several banks about P2P transfers back in the month of November. The company may even partner with an existing network, clearXchange, which already has the support of banks. Regardless of the case, Apple isn’t expected to charge financial institutions for personal transfers. If Apple does enter the market, the Cupertino California company will face tough competition. Aside from PayPal and its Venmo subsidiary, which control a large chunk of the mobile payment space, companies like Square and even Facebook are entering into the arena.
We’ll have to wait and see what happens.
Source: Yahoo (Finance)
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