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Apple’s mobile payments aspirations come into focus with patent award

March 8, 2012

Apple patent is approved relating to a mobile payments solution

The shape that Apple’s rumored mobile payments solution will eventually take became a little clearer this week when the manufacturing giant was awarded a patent that covers mobile payment controls.

Apple was awarded a patent by the U.S. Patent and Trademark Office for a technique that sets financial transaction rules to control subsidiary financial accounts. The patent description suggests the technology could be used by a parent to set up a prepaid subsidiary account for a child or a by an employer setting up rules for a employee’s payment account on a mobile device.

“If Apple can extend the credit card-supported trust that consumers voluntarily provide to facilitate App Store and iTunes sales, they might be able to bake up a sweet offering that, supported by patents, could change the game,” said Wilson Kerr, Boston-based vice president of business development and sales for Unbound Commerce Inc.

“Apple is in the business of making devices that work very well,” he said. “They make money in other ways, but, unlike their competition in the mobile payments space, Apple has a core mission to protect.

“If consumers suspect they paid for a device that generates additional revenue for Apple via the use of that same product, there could be backlash.”

Competing solutions
It is still now known when exactly Apple will introduce a mobile payments solution.

However, whether Apple enters very soon or sometime in the near future, it will be coming into a market that is already crowded with mobile payments solutions from other technologies companies, including Google, as well as wireless carriers, financial institutions and others.

The latest group to set their sights on the mobile payments segment is retailers, with Walmart, Target and other retailers reportedly working on a project that involves mobile payments and offers.

“Apple has many patents related to mcommerce, NFC and payment,” said Gary Schwartz, CEO of Impact Mobile, Toronto. “Their IP wars and in-market trials with EasyPay are all clear testaments to their plans to leverage iCloud, iTunes and some iWallet to transact an expanded form of commerce in 2012.

“While Google and PayPal are in a draw out battle in bricks-and-mortar, Apple will most likely use their strength in cloud checkout to compete with VISA’s”

Vibrant mobile marketplace
One of Apple’s advantages compared with the competition is that it can test a mobile payments system via its own Apple retail stores before rolling it out more broadly.

Many companies are trying to lock up mobile payments patents right now in anticipation of what is expected to be a significant uptake in mobile payments volume over the coming years.

Apple is already one of the pioneers in the mobile payments space via its App Store and iTunes and appears to be setting its sights on further developments in the mobile payments space as reflected by its latest patent approval.

“They have a vibrant mobile marketplace that has already sold over 25 billion products – as app and iTunes downloads – and maintain 225 million-plus active credit card-linked accounts,” Mr. Kerr said.

Despite the competition, the industry is keeping a close eye on Apple’s moves as the company is known for disrupting markets with strong design and best-in-class user experiences.

The description for the patent awarded to Apple says the financial transaction rules may be based on upon transaction amounts, aggregate spending amounts over a period, merchant categories, specific merchants and geographic locations. It also suggests credit card companies will be sending statements directly to an iTunes account.

The patent was originally filed in January 2009.

“Apple has learned from its in-app billing experience on iTunes that parents become irate when kids use their billing account to ring up large bills in freemium games or download unwanted content,” Mr. Schwartz said. “Intelligence content monitoring little Johnny and Sally’s phone controls makes sense for family wallets.

“It also makes business sense for content-cautious employers that want to give incentive iRewards to employees,” he said.

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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