ApplePay: Why it matters

ApplePay is Apple's (AAPL) just announced payment system. As predicted, it will be take advantage of NFC chip technology, and as predicted, it will launch with a huge number of launch partners, so that when it goes live in October, you will be able to use it at stores all over the country. ApplePay will let users connect any number of credit or debit cards to their iPhone using the camera, but – and this is what I didn't hear anyone predict – the iPhone won't store your credit card numbers. Yep, apparently that isn't necessary when you have the magic of NFC technology. This is especially reassuring to anyone who has been troubled by the security implications of the recent Apple iCloud nude celebrity photo hack.

AAPL stock was responding with only tepid enthusiasm to the product announcement until Tim Cook got to the part about ApplePay, at which point, it promptly rose 4%.

Why? If iPhone becomes a standard method of payment, as it looks very likely that it will, Apple will be in an excellent position to press for concessions from credit card companies and banks. Suppose that two years from now, 20% of all retail transactions are made by iPhones. Now suppose Apple decides it prefers to deal exclusively with Visa (V), or American Express (AXP). How could the threatened card companies forestall such a tragedy? Did someone say money?

Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.

Julian Close

Julian Close

Julian Close became a stockbroker in 1995. In his 20 years of market experience, he has seen all market conditions and written about every aspect of investing. Julian has also written extensively on corporate best practices and even written reports for the United Nations. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.

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