Apple's Recruitment Efforts Signal a Stronger Payments Push

Apple is interviewing payments industry executives, according to the technology news site Recode, suggesting the computing giant is getting closer to launching a payments operation.

"I definitely believe Apple is preparing to make a serious push this time," says Rick Oglesby, a senior analyst and consultant at Double Diamond Payments Research. "Not only does Apple have hundreds of millions of enrolled consumers, but on average the consumers are a relatively high net worth, high value set of consumers."

Apple is reportedly filling two new senior-level positions—head of product and head of business development—to leverage the hundreds of millions of credit cards that Apple already has on file, Recode reported, citing unnamed sources. Apple did not comment to the technology site, and did not return requests from PaymentsSource by deadline.

The candidates met with Jennifer Bailey, Apple's e-commerce head, according to Recode. Bailey has been assigned to build a payments business at Apple. Apple CEO Tim Cook recently said there's a substantial opportunity in the payments business, suggesting the company is studying its opportunities closely.

"The signals coming from Cupertino (Apple's headquarters) are strong enough to conclude that Apple is preparing to make its big move. The big question is if Apple will play with or against the payment networks," Oglesby says.

Apple's impact on payments may be surprisingly muted, given financial pressures.

"I'm certain that Apple will make more advances in payments, yet I disagree that Apple is at all ready to be the next wallet-like superpower," says Jim Van Dyke, CEO of Javelin Strategy & Research. "Certainly the news that they are adding more payments talent signals that they will evolve more in payments, yet I don’t anticipate any effort or success in truly revolutionary payments activity. What's missing is a way to earn a profit on top of the fees that they would have to pay to those who own the rails they run on, which are mainly card issuers."

But Apple's hiring decisions could make it a stronger contender.

"I'll change my position if Apple starts to recruit ACH talent, because then card payment veterans should worry that Apple could become the next Dwolla or Debitman," he says.

Apple's long been rumored to be building a payments business, and it has a wealth of consumer payment information tied to its iTunes and App Store markets, both of which are accessible from mobile phones. The company has never built an iPhone with Near Field Communication technology, which is used by the Isis and Google mobile wallets for contactless payments; however, Isis supports iPhones through an NFC Sleeve.

Apple also has numerous patents on applications of NFC and other payment technologies.

While it's not said much publically, the company's vast scale alone is enough to draw attention from payments industry incumbents.

"Apple has not confirmed whether or not they are developing a mobile wallet solution, but it would have a significant impact on the existing mobile payments market if they decided to enter the landscape," says Nathalie Reinelt, an analyst at Aite Group. "Not only because iPhones make up approximately 44% of all smartphones in the U.S., which are not NFC compatible, but because they are already a highly successful digital wallet provider via iTunes, with north of a half a billion iTunes users currently transacting on their platform."

Apple also has a number of relevant assets that can be configured creatively to develop an attractive payments proposition, including the Passbook wallet app, the Touch ID fingerprint authentication system, the iCloud Keychain credential storage system, AirDrop and iBeacons, reported Celent in a March report on Apple's possible foray into payments. "In addition, Apple's customers are loyal, passionate, and often with the means and willingness to spend more on average than users with other smartphones," the Celent report said.

Apple's payments system is likely to be a closed loop network rather than a more open mobile wallet, Celent predicts.