- Apr 12, 2001
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."
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.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?
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?