iMoney – A New Business for Apple

One of the spaces I’m most excited about right now is mobile payments. The idea of untethering us from a physical wallet by leveraging the power and ubiquity of our mobile phones is a vision that many established companies and start-ups alike are pursuing. It’s no wonder either, given the size of the market opportunity – as a single data point, in 2009, Visa processed $4.4 trillion(with a T) dollars of transactions, and the electronics payment industry as a whole is growing at an estimated 12% CAGR. So, yeah, it’s a big pie and everyone grabbing for a slice.

There are many competing approaches currently in the marketplace. While the execution of the strategies varies, they are all generally built on the existing payments infrastructure of Visa/Mastercard/AMEX. A few examples are:

• Google Wallet, which runs on Near-Frequency Communication (NFC) chips implanted in the hardware of the phone and allows contactless payments using your phone as a credit card. Partnership with Citi Mastercard and Sprint at launch.
• Isis, a partnership between AT&T, Verizon, and T-Mobile, is also pursuing a mobile wallet approach that leverages the Visa, Mastercard and Discover payments networks
• Square, the newest member of the $1 billion start-up club, which turns your iOS or Android mobile device into a payment terminal via either a small hardware fob or an app. Using Square just feels like the future!
• One of my favorite products right now is Venmo, a mobile and web application that allows amazingly easy and fee-less peer-to-peer payments. By attaching your credit card and bank account information, you can pay your friend for a beer using your credit card through your phone. The funds will then be deposited into his bank account within 1 business day.

Certainly at this point it’s difficult to predict which companies will become preferred solutions (and the market is so big there are opportunities for many winners, particularly when you begin to parse C2B enterprise from C2B small biz from peer), but one company that I would like to see be more active is Apple. Given that it has 200 million credit cards (2x Paypal), completely integrated hardware and software (including a browser), and deep experience handling transactions at scale (15 billion app sales), running an payments network would be a natural extension. Perhaps dubbed “iMoney?”

The concept is simple – use your iMoney (nee iTunes) account, which already contains your credit card information, to pay for purchases all over the web. Apple has a built in head-start given its cache of credit card data (the same moving start would go, to a lesser degree, to Amazon and Groupon as well, each of whom also has millions of credit cards on file) and could easily leverage this information to allow users to pay businesses and each other by entering nothing more than an iTunes password. At present I have to enter my credit card information for every unique transaction I make across the web (and each time I register download a new mobile app) – iMoney could elegantly address this. Beyond allowing “one-click” buying on sites that accept iMoney, Apple could integrate iMoney into its iOS, much in the way it is baking in Twitter. Done right, this could have a large impact on the “app world” we’ve all come to live in. At the most basic level, it could eliminate a step of app setup whereby I register the same credit card for every e-commerce app I download. Rather, in the same way that I authorize the app to use my location data at download I would also authorize it to connect to my iMoney account. Thinking further down the road, it could make mobile web transactions much more appealing by reducing the required data input to consummate a transaction. This could be the beginning of the end for the “proprietary app centric universe” we currently live in, as Fred Wilson describes it, because iMoney has the potential to make mobile web purchases as easy and one-click as app purchases.

Given that I hate paying cash and write exactly one check per month, I love the current innovation in electronic payments that smartphones are facilitating. With Apple showing no signs of relinquishing its status as the smartphone that all competitors chase, it would surprise me if they didn’t build upon their formidable iPhone/iTunes base to enter the payments race. I, for one, would welcome it.