By Dan Moren
December 4, 2014 12:34 PM PT
Wish List: Apple Pay your friends
Okay, paying for things with your smartphone may not be revolutionary, but let’s all agree that it is pretty cool. I’ve been using Apple Pay for a month or so now, and my main complaint is that it should work in more places. (Get on that, vendors!)
Still, the seamless nature of the Apple Pay experience has me wondering if Apple might not be able to—yes, I’m going to use the dreaded ‘d’ word—disrupt another stale process: person-to-person payments.
It’s long seemed ridiculous to me that it’s not easier to transfer funds between people electronically. After all, your bank account and my bank account are little more than entries in a ledger somewhere, represented by 1s and 0s. Why should it be any harder for me to send you some bits that turn into money than it is for me to send you an email?
Well, security for one reason—and like everybody else, I appreciate that our financial institutions take that seriously. But banks also have a vested interest in keeping your money right where it is. Some, admittedly, are better than others about technology adoption: mine, USAA, was among the first to offer the ability to scan checks or deposit them via smartphone. But notice that those innovations are about making it easier for you to get money into your account.
Now, full credit to the companies already working in this area. PayPal, Dwolla, Square, and so on have already started making this process way less painful than it used to be. But the market is seriously fragmented right now, enough so that the first step of any electronic transfer is to determine whether the other party has an account on the same service. That’s a huge barrier to entry, especially for the less technically savvy folks.
Here’s an example: I run an ultimate frisbee team. Twice a year, I need to collect dues from my players. Despite the availability of many of these services, only about a third of payments were sent to me electronically; most people still opted for cash or a check. (To be fair, many used bank services that let you have a check printed and mailed to someone—a weird system that feels a bit like printing out emails and sending them via snail mail.)
Without trying to pretend I have any business savvy whatsoever, I’d say you could describe this situation as an opportunity ripe for exploitation.
So think about it: What if Apple Pay let you transfer money from one person to another? It’s already linked to your debit account—in that sense, it could work much like Square Cash. Just go into Passbook, hold your phone near someone else’s, put your thumb on the Touch ID sensor, and voilà—payment done. I envision an experience that’s kind of a mix between the existing Apple Pay system and AirDrop.
In theory, Apple could even offer the ability to send funds to people via the Internet. Apple Pay already works for some online transactions, and once again Square Cash has proved that you can transfer funds online without too much hassle.
I realize that it’s not quite as simple as I describe; there are surely more details and tricky issues to navigate. But piggybacking on the existing debit card system does obviate the need to “sign up” for a specific system, and with the already broad adoption of Apple Pay, there’s a built-in customer base. Plus, if Square can figure out how to make transfers between individuals free, Apple can certainly do the same.
Granted, it might just sound like I’m saying Apple should buy or kill Square. Frankly, I’d love it if they teamed up: Square recently announced it would let people transfer money via Snapchat; I’d love to see the same implementation, but for iMessage.
Every time I write a check, I sigh a little bit over the sheer antiquity of the process. Honestly, I’m amazed that such a seemingly fragile experience has held up for all these years. I don’t expect checks to disappear entirely, in the same way that there are still weird little pockets of reality where organizations insist that you fax them. (Though I would be shocked if most people under the age of, say, 25, are writing that many of them.)
Still, I’d be shocked if, within the decade, we’re not all looking back and laughing about the olden days where we needed to fill out little slips of paper to send someone money.
Laughing, that is, all the way to the bank.
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