Apple Considering Turning iTunes Store Accounts into PayPal Competitor?

[MacRumors]

Silicon Alley Insider reports that Apple may be considering creating a competitor to eBay's PayPal online payments system, allowing users to make purchases at third-party sites via their iTunes Store accounts. The report does, however, make clear that the rumor is based on gossip and "not confirmed news."

Wall Street gossips tell us that Apple executives have dropped hints suggesting the company is considering creating a service that would allow iTunes Store account holders to use those accounts to make purchases on participating third-party sites across the Internet.

Remember, this is Wall Street gossip and not confirmed news. But you want to be in the loop, right?

The report also notes that it is not clear what Apple's motivation for pursuing an online payment service would be, given the company's history of focusing its ancillary services on driving hardware sales. For example, Apple has primarily viewed the delivery of third-party content through iTunes (music, video, and applications) as a "break-even" proposition to drive sales of its iPod and iPhone hardware.

Apple currently takes a 30% cut of sales made through its App Store and through in-app purchasing, but that margin would have to be substantially reduced in order to be competitive in the online payments arena. That reduced margin may be feasible given the need for the system to only support payment processing on third-party sites in contrast to supporting an entire store infrastructure complete with application approval and other content review, but would still require a compelling reason for Apple to enter the market.

While the gossip source did not elaborate on what that reason might be, the report speculates that Apple could be eventually planning to use iTunes Store accounts (and thus iPods and iPhones) for offline purchases, or perhaps the company simply views the online payments industry as an easy one for it to penetrate to help diversify its business.

Article Link: Apple Considering Turning iTunes Store Accounts into PayPal Competitor?

 

[NinjaHERO]

That would be cool. I never mind having a few more options for online payment.

I wonder if this will lead to us being able to use our iphones to pay for stuff? No more carrying wallets, but using our phones like they do in Japan.

 

[DaBrain]

I would prefer that Apple sticks to making great computers and great software.

I would not use this service and must admit I have great disdain for pay pal and like services. Just my 2 cents worth.

 

[chukronos]

This would be great! I am tired of Paypal. Hopefully, iTunes could come up with a better pay structure. I am about to cancel the Paypal option for my website.

 

[gan6660]

I wonder if this would somehow tie into the tablet?

 

[jdechko]

Maybe the tablet, maybe iPhone/iPod Touch accessories that are bundled with apps.

I've been wondering about the distribution of the TomTom app with the hardware. Will you buy the app and order the hardware separately? Will the hardware be available in, say, Target with a download code for the app? How will it work?

 

[ct2k7]

would be great, I hate PayPal anyway, but too many people use it, and not enough Google checkout, this might not go too well.

 

[topgunn]

I wonder if this would somehow tie into the tablet?

That was my guess.

 

[Soundcage]

Is this the reason for Apple's new sever's in North Carolina?

You would need some pretty hefty servers to handle the increased load. As we all know, Apple just put $1billion into a server farm in North Carolina. Makes sense.

 

[gan6660]

would be great, I hate PayPal anyway, but too many people use it, and not enough Google checkout, this might not go too well.

Man it seems apple is really starting to hate google. This could be more competition between them. Whats next Apple comes out with iSearch?

 

[coolfactor]

Apple's strength is in the simplicity for users/implementers. I see this as a good thing if it came to fruition, since it would raise the bar for PayPal et al to "clean up" their implementations.

 

[NAG]

They would have to seriously upgrade the security of their accounts if they are to do this. An Apple Representative happily changed all the info minus the credit card number in my account after someone gave him the serial number to my old iPhone. This then populated out to all the accounts connected to my Apple ID, some of which I cannot change back nor find anyone who will change it for me (no, my first name is not Sherry, Apple).

The sad fact is that Apple is incredibly easy to use social engineering on to allow you to hijack accounts.

 

[Andy-V]

This is not a business model that suits Apple and it doesn't really make sense. iTunes accounts are very specifically for itunes and buying content there. Why would Apple allow people to spend their money on a 3rd party website rather than in Apples own store?

 

[teleromeo]

It would make all iTunes store customers more vulnerable to phishing, even those that only intend to buy content from that one store.

 

[AngryApple]

Err. What would be the point? PayPal doesn't charge to use their service, so Apple wouldn't be making any money?

 

[gan6660]

Err. What would be the point? PayPal doesn't charge to use their service, so Apple wouldn't be making any money?

Paypal does charge to use the service. Everytime you receive a payment they take a percentage of it. If Apple makes it free everyone on ebay would start using it and that would force paypal to change.

 

[flpatriot]

Err. What would be the point? PayPal doesn't charge to use their service, so Apple wouldn't be making any money?

Per-transaction fees. PayPal’s are something like 2.9% per transaction. Apple couldn't charge the 30% they’re getting for iTunes Store purchases, but the basic idea of a per-transaction fee would probably stick.

 

[jav6454]

So that new server farm in North Carolina now is getting an excuse? Interesting....

For whatever Apple is planning, I hope is for the best of us. I mean, I wouldn't mind having everything tied to my iTunes Account. It would most definitely diminish the multiple accounts x, y, z shopping places.

 

[gusious]

And this would be nice cause.........?

Why does everyone hate paypal? Never used the service but i'm curious....

 

[noodle654]

I really cant see Apple doing this, and if they do, making it better than PayPal would be hard. PayPal, for me, is amazing. The rates are low and I have never had a problem. I dont think Apple will enter this market.

 

[dubhe]

Anything that puts pressure on PayPal gets my vote; great idea, OK service

 

[SFStateStudent]

I'd rather pay the transaction fee to Apple v. eBay/PayPal. I've never understood the pay fees to eBay & PayPal crap since they are both the SAME company. Good for Apple to consider breaking up that monopoly EB/PP has dominated for years.....

 

[gan6660]

I really cant see Apple doing this, and if they do, making it better than PayPal would be hard. PayPal, for me, is amazing. The rates are low and I have never had a problem. I dont think Apple will enter this market.

They could make it free. There its already better than paypal. I sold a laptop on ebay for $800 and the fees were $30 for paypal and $30 from ebay. Thats $60 to one company for doing nothing!

 

[striatedglutes]

I sold a laptop on ebay

Thats $60 to one company for doing nothing!

Are you serious?

 

[Mattie Num Nums]

I've sold over 3500 dollars on ebay and using Paypal and it only cost me 60 bucks.

As for this story. What is happening to Apple???

I'd rather pay the transaction fee to Apple v. eBay/PayPal. I've never understood the pay fees to eBay & PayPal crap since they are both the SAME company. Good for Apple to consider breaking up that monopoly EB/PP has dominated for years.....

Because credit card companies charge between 3%-5% for every transaction to the vendor.