There have been rumblings in 2014 that Apple were ready to make a move into the payments world. The company's progress has been slow, but there was some speculation that at this year's worldwide developer conference, Apple would perhaps give the world a glimpse of the direction it is tentatively heading in. Is an iPay app in the works? In fact, Apple focused on its new operating systems, OS X and iOS 8, alongside its new healthcare apps. However, for those paying attention, there was perhaps a glimpse of Apple's intentions in the payments world.
The iPhone 5s introduced finger print scanning technology. The technology was limited to Apple's own proprietary applications. Users can unlock their phone for example with a fingerprint scan, or more innovatively, approve a payment on iTunes. Apple has now developed an API for the fingerprint scanner and opened it up to all developers to integrate into their own apps.
Immediately this opens up the door for payment and wallet applications to do away with usernames and password or pin code access. But just how safe is the fingerprint scanner? It's not perfect but actually the technology is pretty strong. The major criticism of the method is that your fingerprints are a 'token' you leave everywhere around you. But taking advantage of that is not a simple hack by any means.
"this opens up the door for payment and wallet applications
to do away with usernames and password or pin code access"
As a result, even Apple still requires users to use a pass code in conjunction with their fingerprint scanner, recognising that it is not faultless. On the plus side, the fingerprint data is stored locally on the device and would not be vulnerable to an online hack of a cloud based system.
So Apple didn't come out of the closet on its payments plans this year, but I think there are two main conclusions we can take from the conference about the company’s approach to payments.
Firstly, it looks like Apple doesn't actually want to get directly involved in the payments world currently. Apple seems to want to remain a slick and cool lifestyle product, just look at the focus on healthcare apps - it maybe does not see a form of "banking" as being consistent with its brand. It would therefore follow that for Apple, the best position is to remain agnostic in the payments space, and to concentrate instead on providing innovative technology and capabilities to facilitate them - like the fingerprint scanner. A continued investment in beacon technology also seems likely.
"Apple appears to recognise perhaps that identity
can be a powerful tool in providing a payments solution"
Secondly, in common with our thinking at Ensygnia, Apple appears to recognise perhaps that identity can be a powerful tool in providing a payments solution and we think that can only be seen as a good thing in the long run. So while we are yet to see Apple really show their full hand in the payments space, that might just be because they don't have the ambition to compete directly. Payments just simply might not fit the brand - all a little apples and oranges maybe.
By Matthew Taylor 10th June 2014
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