Can Apple Pay Benefit from Banks' P2P Expertise?

Apple is reportedly going to its bank partners with a pitch to tie in their scale to jump-start an Apple-branded person-to-person payment system.

Apple is talking to JPMorgan Chase, Capital One, Wells Fargo and U.S. Bancorp about a P2P system, according to a Wednesday report by The Wall Street Journal. These banks are among the owners of clearXchange, a bank-led P2P payment service that covers more than half of the U.S. digital banking market.  

Apple may decide to hook into clearXchange, according to the Journal. Apple wants to allow consumers to use their checking accounts to make payments via their Apple devices, likely through Apple Pay, though the technical aspects of how that would work are still being discussed, according to the report. Apple did not return requests for comment on Wednesday afternoon and clearXchange executives could not be reached for comment.

For Apple and the banks, a collaboration would provide another venue to attract consumers to mobile transactions, where consumer adoption has severely lagged; as well further lock consumers into the iPhone ecosystem.

"Bank customers would expect to be able to get this service from Apple Pay," said Richard Crone, a payments consultant. "It's another distribution channel."

ClearXchange started as an online person to person payment system, but it's added other use cases over time. ClearXchange is also being combined with Early Warning, a risk management system that's owned by many of the same banks that own the P2P network.

The pending Apple/bank service, which would launch in 2016, is similar to Venmo, a P2P app that PayPal acquired when it purchased Braintree two years ago. Since Apple Pay's launch, Google and Samsung have also developed new mobile wallets, while an increasing number of banks are forming their own mobile payment systems.

Rather than positioning these services as competitors, banks would benefit from providing as many payment options to consumers as possible, Crone said.

"These are not mutually exclusive," Crone said. "Banks have to look  at the easiest ways to make connections with their customers."