Apple is reportedly working on a service to allow consumers to pay each other directly from their phones, elbowing in on a market already crowded by start-ups such as Square and established players such as PayPal.
According to The Wall Street Journal, Apple is talking with U.S. banks to develop a mobile person-to-person payment service that could launch as soon as next year. J.P Morgan Chase, Capital One and Wells Fargoare among the banks Apple is reportedly in talks with about the service.
Apple declined a request by USA TODAY to comment on the report.
Shares of PayPal (PYPL) — which owns a similar P2P payment service called Venmo, as well as having its own P2P PayPal app — sank 1.8% to $36.33 on Wednesday, while Apple (AAPL) shares dropped 0.6% to $116.11.
“I don’t think it’s surprising that Apple would go down this route of trying to create its own peer-to-peer or person-to-person payment service,” eMarketer analyst Bryan Yeager says, given Tim Cook’s vision of replacing the physical wallet.
The new service would likely complement Apple’s first efforts to eventually make the wallet obsolete, Apple Pay, which launched last year to allow users to make purchases at brick-and-mortar stores (and online) with their smartphone or Apple Watch. But you can’t use Apple Pay to exchange money with friends, family or perhaps the kid who cuts your lawn.
Several other companies have long since jumped into this aspect of the mobile payments business, including PayPal, Google, Facebook, Snapchat and payment processing company Square, via its P2P payments app Square Cash. If the Apple rumors prove to be true, the news could prove damaging to Square, which is preparing to go public.