Look Out eBay: Munster Sees Digital Wallet in Apple’s Back Pocket
Will Apple’s (NASDAQ:AAPL) next-generation iPhone make the Cupertino-based company a major player in the burgeoning mobile payments service market? Piper Jaffray analyst Gene Munster believes that the upcoming iPhone 6 will include Near Field Communications (NFC) technology that will allow Apple to make the device a digital wallet, or e-wallet.
While it wasn’t clear if Munster had new evidence to support his claim, his prediction of an NFC-enabled iPhone aligns with a recent report from BrightWire. According to BrightWire’s unnamed sources, Apple has already reached a deal with China UnionPay that will allow Apple users to make mobile payments with their iPhones through the device’s NFC chip. Munster also noted that the iPhone maker’s sizeable iTunes user base puts the company in a good position to create a digital wallet.
“We believe that Apple, with its nearly 800m active iTunes accounts (as of April 2014), has a valuable asset in terms of credit cards linked to its services,” wrote Munster in a research note obtained by StreetInsider. During Apple’s last quarterly earnings call, CEO Tim Cook noted that most of those 800 million iTunes accounts are linked to credit cards. Assuming that “most” means at least 51 percent, it can be safely assumed that Apple has over 400 million credit cards on file.
For this reason, Munster believes that Apple could one day challenge eBay’s (NASDAQ:EBAY) PayPal as a major player in the digital wallet market. On the other hand, Munster also believes that Apple may have trouble competing against more established mobile payments service providers like eBay.