Apple Pay In A Blockchain World
Acquiring A Large Bank Would Benefit Apple
Mobile wallets first hit my radar 17 years ago when the space was top of mind with venture investors. Today, Apple Pay is the leading contactless mobile wallet with Google Pay in second position. Many more competitors are coming, especially once a Fed-issued CBDC becomes a reality this decade.
There are of course other mobile apps which send/receive payment instructions including credit card apps, PayPal, Venmo/PayPal, Cash App/Block, Coinbase and many more.
The number of payments apps has proliferated since 2007 and more recently since 2019 as crypto currency became a popular speculation vehicle. While I am not a fan of crypto currency (even the U.S. Dollar will soon be a crypto currency as the Fed rolls out Project Hamilton sometime this decade), the underlying Blockchain / Distributed Ledger Technology is real. Banks and non-bank institutions will eventually roll out proprietary Blockchain networks to replace today’s dated, slow, legacy electronic funds transfer (EFT) network. Once the Fed rolls out its Central Bank Digital Currency (CBDC), the number of Blockchain networks built off of the Fed’s Blockchain network will proliferate, so to will the number of mobile payment apps that will serve as the front-end.
This is a long-winded way of saying that as Apple Pay grows its payment volume, it will face a new slate of payments competitors (Coinbase comes to mind, a company that Apple has already beefed with in the courts).
One way for Apple to rise above the din may be for the company to control a portion of the back-end, meaning control a portion of global consumer and commercial deposits. I’ll say it until I am blue in the face, Apple ought to acquire a bank. There are 4 or 5 banks that matter in the U.S. Those banks are J.P. Morgan (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C) and Truist (TFC).