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Apple Pay Cash Launches

Apple Pay Cash Launches
Posted: Nov 10, 2017
Comments: 0
Author: Lou Grilli

Apple joins a growing list of ways friends and family can send money to each other. Will Apple find success with their version?

Apple launched its person-to-person (P2P) payments service, Apple Pay Cash, riding on top of Apple’s iMessage, thereby joining a long list of other tech companies who also offer P2P, including PayPal, Square, Venmo, Facebook, Google, SnapChat, Zelle, PopMoney, and several others. With this service, Apple is hoping to generate new P2P users in a demographic that typically shied away from P2P apps more popular with younger users, and possibly spur increased use of Apple Pay, the tap-to-pay capability of iPhones and Apple Watches.

But Apple Pay Cash faces several obstacles.  For example, Zelle, a P2P offering from a few credit unions and big banks, which allows payments to be directly sent from and deposited into bank accounts (versus Apple’s version which leaves received money in an Apple Pay Cash account) will be launching a multi-million-dollar marketing blitz this quarter. Also, Venmo, a P2P app wildly popular with millennials and Gen Z, has been experiencing double and triple digit growth, moving over $9 billion among Venmo users in just the last quarter. On the surface there doesn’t seem to be any incentive for a Venmo user who is also an iPhone user to switch over to Apple Pay Cash, leaving behind their network of friends and family who already subscribe to Venmo.

Unique features of Apple Pay Cash

Despite its competition, Apple Pay Cash does have some unique features. The funding source to send money is any card already loaded into Apple Pay, giving Apple Pay Cash an already existing base of potential users with existing cards. There are no charges for using a debit card, and a 3% fee for using a credit card.

Another advantage Apple Pay Cash has out the gate is its integration with iMessage, the built-in Apple messaging app. Unlike other P2P services, there is no additional app that needs to be downloaded to start using Apple Pay Cash. Once an iPhone user has opted-in, or is sent money by another Apple user, an Apple Pay button will appear in the apps section of messages. Even more intuitive is that payments can be triggered by the mention of money in a message.

The mechanics of storing and sending money is through the use of a virtual prepaid card, referred to as the Apple Pay Cash card, provided by Green Dot, an industry giant in the prepaid space. To send money, a user first needs to fund their Apple Pay Cash account with a minimum of $10.

Another advantage Apple has over other P2P services is that users can spend their Apple Pay Cash funds using Apple Pay at merchants, apps, and websites that accept it, which is a quickly growing list.

Get the CSCU white paper on P2P payments

A whitepaper providing analysis and comparison on the P2P apps and services in the market is available for download at cscu.net/whitepaper.

Will the advantages that Apple has – embedding the capability in iMessage, access to cards already loaded into Apple Pay, ability to use Apple Pay to spend balances held on the Apple Pay Cash card, be enough to spark sufficient interest in what is essentially a network product, creating sufficient numbers of users to become useful? Please comment below with your thoughts.

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Lou Grilli

Lou GrilliLou Grilli

Lou is the Director of Payments Strategy at CSCU and is responsible for providing leadership to the organization for emerging payments and industry trends, as well as managing the product portfolio.

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