Apple is wading into Venmo’s main business, betting that letting users easily send money to each other will make its Apple Pay service more appealing.
The Wall Street Journal reported on Nov. 11 that Apple has been talking about the program with US banks, including JPMorgan Chase, US Bancorp, Wells Fargo, and Citi. The Journal says Apple and the banks are haggling over technical issues, and suggests that Apple may not be looking to make money off peer-to-peer (P2P) payments. The economics of money transfer are still being figured out, and some tech giants like Facebook offer the service at a loss.
It appears Apple has been considering a move into the area for at least a year. A job posting for a “Senior Architect” for Apple Pay from November 2014 viewed by Quartz mentioned an interest in the “money transfer” space.
One reason Apple is partnering with banks, rather doing it themselves, is that the tech giant wants to avoid filing for money transmitter licenses, people with knowledge of the program told Quartz. By sidestepping such licenses—which PayPal, Venmo, Facebook, and even AirBnb have—Apple can focus on the consumer side and avoid scrutiny from regulators.
Apple is likely interested in the P2P space for two reasons. First, it’s a feature popular with the coveted millennial demographic. Second, it’s a way to rope more users into Apple Pay. The service, which launched in October 2014, hasn’t taken off with consumers yet, mainly because retailers have been slow to update their systems to support it.
One way Apple might add money transfer services to iOS is through iMessage, the proprietary messaging service, according to people who have discussed the program with Apple. It’s already one of the most used default apps on iPhones and is especially popular with the younger crowd—a survey by messaging service Jott found that 60% of teens say that it’s their preferred messaging app, according to TechCrunch.
Messaging and payments are already tied together in Asia, where Alibaba’s AliPay and messaging app WeChat dominate in-store payments, mobile payments, and money transfers. In the US, Facebook is attempting to add payment capabilities to its Messenger chat app.