NEW YORK – Apple is in talks with U.S. banks to develop a mobile person-to-person payment service that would compete with PayPal’s Venmo platform, reports the Wall Street Journal.
The service would allow consumers to zap payments from their checking accounts to recipients through their Apple devices, writes the news source, adding that the service would likely be linked to Apple Pay, which allows customers to make credit and debit card payments with their mobile phones.
A launch isn’t imminent, but one person said such a service could get off the ground next year.
Apple has been talking with a number of banks about the service, including J.P. Morgan Chase & Co., Capital One Financial Corp., Wells Fargo & Co. and U.S. Bancorp.
The new service would represent another move by Apple to get customers to use their iPhones for more everyday needs, such as financial services, notes the news source.
“It also represents the latest attempt by banks and other providers to shift Americans away from cash and checks, which are still the most popular methods that people use to make payments to one another,” writes the news source.
In addition to PayPal’s Venmo service, person-to-person payments are also offered by Google, Square Inc. and Facebook. Venmo accounts for 19% of mobile person-to-person payments, according to Aite Group. The service is “favored by young American adults who particularly like a feature in which they can list their payments on a social media feed,” such as sharing a dinner bill or paying utilities. WSJ writes that sending money is free through Venmo when pulled from a linked bank account, but there is a 3% fee on credit cards and some debit cards. However, receiving money through the Venmo app is always free.
PayPal says consumers made $2.1 billion worth of mobile payments using Venmo in the third quarter, notes the news source, but mobile payments are still having a hard time gaining traction in the United States. A report by Accenture last month revealed that fewer than one in five North Americans use their mobile phones to make at least one payment a week.
“The market is still wide open for mobile person-to-person payments,” Talie Baker, an Aite analyst, told the news source.
A recent Aite report estimated that U.S. households made more than $1.2 trillion worth of person-to-person payments in 2014, and nearly half of all person-to-person mobile payments were made through mobile banking applications.