Apple Appears to Be Moving Into the Mobile Wallet Market

Credit card deals position company to integrate digital ads and e-pay

Speculation that Apple will debut a digital wallet on the upcoming iPhone 6 reached a crescendo over Labor Day weekend. Numerous publications detailed patent searches and tips from people "familiar with the situation" to support conclusions that the tech giant would be pushing into e-payment territory.

If Apple fully exploits the patent it received for an "omni-wallet," it could introduce a system that integrates digital coupons, product search, users' bank and credit card information and advanced encryption. Visa and MasterCard are reportedly onboard, and Re/code announced last week that Apple had signed an e-payment agreement with American Express.

If true, it could position the iPhone as e-commerce and digital marketing platform. Mobile payment consultant Richard Crone told Bloomberg that mobile wallets could generate about $300 per person annually in advertising revenue. Re/code added that ads placed through an Apple mobile payment app could be targeted based on consumer data compiled through iTunes and the App Store.

An iPhone 6 with the so-called "iWallet" would represent just the latest entrant into what has become an increasingly crowded e-wallet market. Amazon just introduced an app that let users scan or tap to pay while in a brick-and-mortar store. Google Wallet and PayPal's Venmo have been available for far longer. Add competition from online payment and banking specialists like Square and Simple, and Apple will have to focus on what makes its system preferable to the competition. Also, according to MacWorld, Apple intends to do that by highlighting physical aspects of the phone. The publication said it will have 4.7- and 5.5-inch screens, a sharper camera and the possibility to upgrade to the upcoming iOS 8.

However, using smartphones to purchase everything from clothes to gas and fast food remains relatively rare in the United States. Consumers in Europe, Asia and Africa are much more willing to ditch cash and plastic for electronic means. In all locations, however, millennials are the most likely to both have smartphones and use mobile payment apps.