Apple’s on-again, off-again flirtation with building its own money-transfer service appears to be back on.
The company has recently held discussions with payments industry partners about introducing its own Venmo competitor, according to multiple sources familiar with the talks. The service would allow iPhone owners to send money digitally to other iPhone owners, these people said.
One source familiar with the plans told Recode they expect the company to announce the new service later this year. Another cautioned that an announcement and launch date may not yet be set.
Apple previously held talks with banks about such a service back in 2015 but did not end up launching anything.
If it happens this time, the new Apple product would compete with offerings from big U.S. banks as well as PayPal, its millennial-popular subsidiary Venmo, as well as Square Cash in the increasingly competitive world of digital money-transfers. Chase’s QuickPay service processed $28 billion in transfers last year, while Venmo registered $17.6 billion in volume and is still doubling year over year.
These services have typically been money losers for the new entrants in the space, but are seen as the gateway to the next generation of payment and personal finance services that could upend traditional consumer banking relationships. They are used for everything from splitting dinner bills to paying rent.
Apple has also recently held discussions with Visa about creating its own pre-paid cards that would run on the Visa debit network and which would be tied to the new peer-to-peer service, sources told Recode. People would be able to use the Apple cards to spend money sent to them through the new service, without having to wait for it to clear to their bank account.
Users could then add the debit card, which may only come in a digital form, to their Apple Pay digital wallet to use for tap-and-pay purchases at brick-and-mortar stores. The card number could also be used to make purchases on websites and in apps.
Apple and Visa spokespeople declined to comment.
Apple is looking for new ways to boost usage of Apple Pay, and the debit card could be one way to do that. Several sources inside big U.S. banks told Recode that Apple Pay usage has been lighter than expected since it launched two and a half years ago.
Long-time Apple analyst Gene Munster recently told the Wall Street Journal that he estimates Apple saw $36 billion in 2016 Apple Pay transactions, well below his original prediction of $207 billion. The service has an uphill battle in physical stores because it is not accepted everywhere and is not widely viewed as a significant upgrade over physical cards.
Industry insiders are much more excited about the service’s future inside of websites and apps. That’s because it eliminates the need to enter in information like card numbers and shipping addresses that can be a cumbersome task on the small screens of mobile phones.
Apple charges banks 0.15 percent of each Apple Pay credit card transaction in the U.S., and a tiny sliver of debit card purchases. But Apple would likely not charge consumers to use the money-transfer service, meaning it might only be able to make money if they also use the Apple debit card tied to it.
The potential of Apple getting its own debit card, however, is not sitting well with some bank executives, sources told Recode. Some plan to raise their concerns with Visa next week during an annual summit that the credit card company is hosting for its bank partners.
“Banks spent heavily in insuring their cards were top of wallet when they all built and rolled out Apple Pay,” said Cherian Abraham, a digital payments executive at Experian. “So it’s justifiable to be concerned that Apple will have its own card and could potentially be top of wallet. If you are top of wallet, you are top of mind.”
It’s unclear whether pushback from the banks could pressure Visa into not working with Apple on the initiative, or what that might mean.
There is a chance that banks’ fears may be overblown, however. Apple would likely have to provide incentives or rewards to get people to switch to its pre-paid card over their existing credit or debit cards. But it’s not clear whether Apple is willing to fund such a rewards programs itself, and it seems unlikely that banks or merchants would do it for them.
One potential target audience for a pre-paid Apple debit card could be teens or college -aged young adults who don’t have a bank account or credit card, but want an easy way to use the money their friends or parents send them through the service. Square’s Square Cash service offers a similar virtual debit card, and CEO Jack Dorsey talked about this very use case at a recent Recode Code Commerce event.