Why peer-to-peer Apple Pay is a great idea

Yes, Apple should absolutely expand Apple Pay to cover Venmo-like person-to-person payments. Someone's got to get this right!

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Even in 2017, paying for things is still mostly terrible—even more so now that a multitude of options seem to confront us every time we step up to a register: Do I swipe? Insert my card? Enter a PIN? Sign my name?

When Apple Pay launched in 2014, it came with the promise of reducing much of that complexity. Just tap your phone or Apple Watch to the reader and you’re done. That hasn’t exactly panned out, thanks to both the fragmentation of payment methods and less-than-universal adoption of Apple Pay.

Still, given the inroads that Apple has made in paying businesses, it’s somewhat surprising that the company hasn’t yet jumped headfirst into person-to-person payments. However, if a report in Recode this week is any indication, Apple may be eyeing just such a move. And the benefits for its users could be tremendous.

The pay app gap

Recently, a few friends and I went on vacation for a week and a half. Of course, that meant incurring a lot of expenses that were shared among us, so we used the handy Splitwise service to sort them out. But when it comes time to pay, how do you handle that? There are no shortage of services these days: Venmo, PayPal, and Square Cash, just to name a few.

The biggest downside with any of those is making sure that the person you want to pay has the same service. If they don’t, you have to go through the whole rigmarole of downloading an app, creating an account, linking it to your payment method, and so on. It’s enough to make you want to pull out the old checkbook.

Having person-to-person payments integrated into Apple Pay would make things considerably easier, in the same way that having iMessage built in to iOS simplifies communication: by establishing a standard that anybody with an iPhone or iPad has access to. You wouldn’t have to worry about whether the other party will be able to get your payment.

However, like iMessage, such a system would presumably be for Apple customers only. So if you want to fire off payment to an Android-using friend, you’d have to fall back on a third-party service. But to Apple that may not be a problem at all. The company would likely see it as a competitive advantage that will help attract more people to its platform.

Dollars and sense

The Recode report suggests that Apple’s P2P payment system might work by creating a virtual debit card linked to Apple Pay. (Square Cash has a similar option within its app.) When others send you money, it would be credited to that debit card, which you could then use to purchase things without waiting for money to go through your bank.

It’s unclear exactly how the mechanics of the person-to-person transactions would work, but Apple’s existing technology would provide a good foundation. For example, iMessage already has access to your contacts, so Apple could make it easy to attach money to a text message, just as you would a picture or video.

Plus, Apple likes to tout iMessage’s end-to-end encryption, which would keep payments secure. Services like Square Cash already let you send payments via iMessage, thanks to the new iMessage apps that debuted in iOS 10, but Apple could no doubt streamline the method even further if it were simply integrating its own services.

It could even add an API to allow third-party apps to take advantage of this system. That way, the next time my friends and I use Splitwise to total up what we owe each other, we could just tap a button to have that payment sent via Apple Pay, authenticated via Touch ID. Doesn’t get much easier than that.

Paying dividends

As for what’s in it for Apple, P2P payments would probably not be a big revenue source for the company. As Recode points out, most of the P2P payment services offered by big companies are free. They’re intended to draw more people to the platform, in the hopes that they’ll move to transactions that are more profitable for those companies, like buying things from companies.

Apple certainly doesn’t need to make money from person-to-person money transfers. It’s already pretty comfortable offering free features as incentive for people to buy into its ecosystem. And if the company did offer a debit card that you could then use to, say, pay for iTunes purchases or buy things from Apple, well, that’s just keeping it in the family.

More to the point, I think simplifying person-to-person payments—and cutting through the mess of financial institutions—would appeal to Apple’s philosophy of trying to make complicated systems easier to use. Person-to-person payments that don’t involve cash are a pain point that we haven’t really solved yet, and it seems like just the kind of achievement Apple would like to have under its money belt.

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