When you finally grasp the magnitude of Apple’s play in the payments business, it becomes clear that potential competitors will be shunned from
the platform. As Daniel Terdiman
suggests in CNET, "New Apple features may leave fresh
app roadkill in their wake as Apple is likely to undercut several existing third-party
applications." With the introduction of Passbook, Apple has launched mobile payments on iOS and competing virtual payment systems, including bitcoin, must be terminated.
Roadkill in payment apps has already occurred and they were never given
the chance to be made irrelevant.
The decentralized digital currency
bitcoin has had two functioning payment applications on the Apple App Store -- Blockchain Wallet and BitPak,
both of which have since been unceremoniously evicted. Several other bitcoin-related apps currently appear in the store but they don't seem to be restricted by Apple since they don't
enable send/receive transaction capability
as the wallets do.
In April, I covered the extraordinary
Blockchain Wallet product in Forbes only
to see the app abruptly removed from the store in less than two weeks.
The explanation given
by Apple was that "apps must comply with all legal requirements in any location where they are made available to users." Apple
further stated, "it is the developer's
obligation to understand and conform
to all local laws" and the developer
was referred to the legal department for an exact explanation of which law it violates.
Clearly, they will not be able to cite a law as no laws prohibiting bitcoin currently exist in any jurisdiction. Fortunately, the wallet app is still
available here at
the Cydia Repository for jailbroken iPhones.
At about the same time, BitPak received an electronic
notification that the first bitcoin
wallet for iOS had also been removed from the Apple App
Store again citing similar legal reasons. Sadly, BitPak's developer says that he
would have continued BitPak development had the app stayed
in the store and that he had been working on a revision which would have put the blockchain
in the cloud for greater efficiency.
Basically, it boils down to this. Apple realizes that, with their current
installed base of 400 million active credit card details, the mobile payments war at the point of sale is largely theirs to lose. Why complicate
the strategy by offering competing currencies and competing systems on the iPhone
platform? If Apple can facilitate proprietary mobile payments successfully, it can undoubtedly
spur demand for more
Apple products.
Even though bitcoin payment apps could boost
sales of Apple mobile hardware, bitcoin poses a
more specific threat because, as its own independent, nonpolitical currency, the third-party legacy players (i.e., VISA, Mastercard, banks)
can be bypassed which would disrupt Apple’s partnerships with dongle players
like Square and iZettle. Bitcoin payment apps have already demonstrated the effectiveness
of QR codes
and scanning at the point of sale which is obviously
Apple’s bridge strategy
prior to full Near Field Communication (NFC) deployment.
According to Caribou Honig, a partner with QED Investors:
"The pending battle for these revenue streams will be the stuff of legends. Never have so many corporate giants been lined up for their piece of the pie. Let’s start with Apple. My thesis is that
they are the only company capable of catalyzing
adoption of tap-to-pay on
smartphones. But which prize do they seek?
I predict they
will take no interchange revenue and no fees.
They will avoid such barriers
to adoption. Advertising revenue will be negligible.
Apple’s prize is simply to boost sales of high margin iPhones. The mobile wallet will be a
key selling feature and create yet another
means to lock people into the iOS platform."
Bitcoin is
not the only virtual currency target. The founders of micro-payment
service Flattr say that they are the victims of an 'app dictatorship' after Apple rejected the podcatcher Instacast based on its integration with Flattr. Apple cited App
Store Review Guidelines 21.2 which states that "the
collection of donations must be done
via a web site in Safari or an SMS." A Bitcoin
Forum member then surmised: "Have the app create the script and route
that out through using SMS. I wonder what the difference is though between
an app that uses Flattr and an app that uses PayPal, as far as being used to transfer funds from one person to another."
PayPal is a unique and interesting exception. Having
been in the App Store since the very
beginning, PayPal has
the volume and clout to the point of where rejecting it would harm
Apple more than PayPal. Also, PayPal holds consumer accounts and processes only national currencies so they are more like a bank and card company combined. However, Apple still hugely regulates what can be
done via PayPal. While consumers can send payments
to each other and link PayPal to fund their iTunes account, developers selling in the App Store are forbidden
in accepting PayPal directly due to Apple’s
30% cut.
Bitcoin might be stymied by Apple for now, but I predict that even the well known PayPal
app will join the growing list of roadkill if Apple decides to enter person-to-person payments.
http://www.forbes.com/sites/jonmatonis/2012/06/13/why-apple-is-afraid-of-bitcoin/
