Wall Street Rumor: Apple planning to take on PayPal with iTunes pay service

Tue, Aug 4, 2009

News, Rumors

Silicon Alley Insider reports, citing Wall Street gossip, that Apple is toying around with the idea of taking on PayPal by implementing a system whereby iTunes users could purchase items via their credit card enabled iTunes accounts.

The report correctly points out that Apple’s bread and butter is in hardware sales, and that its non-hardware business’s are typically only a means to push hardware out the door.  The underlying purpose of the iTunes Music Store, for example, is to drive sales of iPods.  Same goes with the iTunes App Store and the iPhone.  So what, pre tell, could Apple possibly have to gain with a PayPal-esque service

SAI raises two interesting ideas:

Our gossiper specifically said it was not discussed, but maybe this is Apple’s first step toward becoming a way for people to pay for goods offline. As consumers, we’d love this. No more waiting for the bartender to ring you up!

Maybe Apple sees PayPal for what is: an unwieldy clunker of a service that missed its chance. Maybe Apple sees the online payments business as low-hanging fruit — an easy way to diversify its business. Apple computer sales growth has slowed a bit, and executives may worry the company depends too much on its iPhone/iPod biz.

Number 1 sounds feasible and particularly interesting.  Vendors can already process credit card transactions via the iPhone, and if payment via an iTunes account becomes an accepted method of transaction, it could easily become an attractive feature for current and potential iPhone users.

In the end, though, the report mentions a few times that the source for this rumor comes from Wall Street gossips, who more often than not, are a bunch of buffoons who have no idea what they’re talking about when it comes to technology.  And that’s putting it mildly.

So while the notion of iTunes payments is certainly intriguing, we don’t see this happening anytime soon.


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