Reading Apple’s Recent Patent and Acquisition Tea Leaves

Navigator Edition: June/July 2013
By: Matt Zalubowski

When will Apple introduce its mobile payments solution? The highly anticipated answer to this question remains uncertain, but reviewing recent patent filings and certain acquisitions helps shed light on what the future may hold for the computing and design icon.

Recent Apple Patent and Acquisition Activity

  • System and Method for Transportation Check-In – July 10, 2012 – Apple is awarded a patent for its June 11, 2012 announced Passbook application that allows users to consolidate and organize coupons, boarding passes, and loyalty and gift cards in a single digital repository. The application itself resembles an actual wallet and establishes an efficient foundation from which to enable a mobile wallet.
  • AuthenTec – July 26, 2012 – Apple acquires the mobile and network security company to gain access to AuthenTec’s fingerprint sensor and identity management solutions. The move could indicate Apple is contemplating the introduction of iPhone biometric authentication which could eliminate the need to enter a passcode to gain access to one’s phone. Fingerprint-based authentication would also lower chargeback and fraud exposure, two elements industry experts have noted that Apple does not specialize in and would have to address prior to introducing a mobile payments solution.1
  • Simplified Wireless Data Transfers – June 4, 2013 – Apple is awarded a patent that will support the company’s recently announced AirDrop functionality that Apple will include in the fall 2013 release of its iOS7 iPhone operating system. Users will be able to transfer data over a peer-to-peer Wi-Fi or Bluetooth network. While initially intended to support the sharing of photos, contacts, messages and Apple Passbook passes, this same functionality could enable iPhone users to transfer money, be it to individuals or at the point of sale, without requiring the use of a NFC chip technology.
  • iMoney Virtual Currency – June 6, 2013 – Apple files for a patent that describes how a consumer could utilize a cloud-based virtual currency to pay for transactions with his/her iPhone.2  The patent does not specify whether Apple intends to utilize its existing iTunes infrastructure for fulfillment, or whether the virtual currency would allow Apple to process the transaction outside the current payment system network (i.e., Visa/MasterCard). The patent also indicates the ability to use a NFC-based solution to make such a payment. This is noteworthy as Apple has previously stated a NFC solution is not required to enable mobile payments.
  • iCloud Keychain – June 10, 2013 – Apple, during its 2013 Worldwide Developer Conference Keynote address, announces an update to its operating systems that will help users manage and sync account passwords via Apple’s iCloud. Working across all Apple devices, iCloud Keychain will support a 256-bit AES encrypted, single sign-on, password management solution designed to improve account log-in and shopping experiences. This new security update will eliminate the need for users to input multiple account log-ins/password combinations, credit card numbers and shipping and billing address information (note: while credit card expiration dates will be stored, at this time Apple has indicated card security codes will not be retained).3

While keynote speeches, patent filings, and specialized acquisitions do not make a mobile payment strategy, one can speculate how these elements could work together to become a complete mobile solution. Compared to PayPal’s 123 million active users and the approximately ten million individuals that have downloaded the Google Wallet, Apple has a built-in user base of 575+ million iTunes store accounts,4 all of which have an associated credit card.5 Combine this user base with biometric authentication, a simplified mechanism to access credit card information and NFC and peer-to-peer mechanisms to fulfill on traditional card and virtual currency based-transactions, and Apple is in possession of the requisite puzzle pieces to deliver a robust mobile payments solution.

Only time will tell how, if and when Apple intends to officially enter the mobile payments fray, but reading the company’s technology tea leaves provides great insight and fodder as to what may be forthcoming. In the event Apple introduces a mobile payment solution, the company will almost certainly rely on its own design philosophy to deliver a simple mechanism that “offers up the right things, in the right place, right when they are needed,” in order to differentiate itself in what is becoming a crowded mobile payments landscape.6

1 April 23, 2013 NACHA Payments Panel Discussion.
2 Issuer Briefing Room.
3 coverage of Apple’s 2013 WWDC.
4 Tim Cook, 2013 WWDC Keynote address.
5 2013 Ebay Inc. Analyst Day presentation and BloomburgBusinessweek “Google Wallet is Leaking Money” June 6, 2013.
6 Apple iOS7 press release.

For more information, please contact Matt Zalubowski, Manager specializing in Card Issuing,

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