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Apple likely to lose money on person-to-person money transfers through Apple Pay

If Apple does indeed get into rumored person-to-person money transfers via Apple Pay, the company stands to lose money on each transaction in the short term, accepting the losses as a way to further drive adoption of its mobile payment service, analysts believe.




Setting up and validating a new account could cost Apple between 50 cents and $3, on top of which Apple would have to pay at least 25 cents per transaction, research firm Crone Consulting commented to Bloomberg on Tuesday. In general companies such as PayPal don't generate much revenue from P2P, and pull in money from business transactions instead.

Any Apple involvement in P2P would likely just be a means of encouraging Apple Pay adoption, with the hopes of the increased usage spilling into retail. Crone speculated that adding P2P could double usage of Apple Pay by iPhone owners within 18 to 24 months. This is partly because P2P services are "viral" applications, meaning that someone sent cash through an app often has to register with the same app to receive it.

In November, Apple was reported to have spoken to several banks about P2P transfers. The company might even partner with an existing network, clearXchange, which already has the support of banks. In any case, Apple is not expected to charge financial institutions for personal transfers.

If it does enter the market, Apple will face stiff competition. Apart from PayPal and its Venmo subsidiary, which control much of the mobile payment space, companies like Square and even Facebook have entered into the arena.