Apple and Google Pay plan to use blockchain technology? Credit card payments are under greater threat

Wallets of all kinds have become a fashion. Some of these wallets are run by large companies like Apple and Google, while others are run by financial institutions, such as banks. Then there are companies like PayPal that also have a stake in the whole wallet business. These wallets come in all forms and shapes, some are just payment apps, while others have some contactless payment technology that allows people to pay for goods in stores. The underlying technologies of such wallets include QR, NFC, WiFi, Bluetooth, and many more.

The number of payment apps has increased dramatically

According to the Verge, as of January 2016, there were 1 billion active Apple devices. Apple Pay users grew 400% in 2016 alone. According to Apple Insider, 11 million points of sale around the world accept Apple Pay. On the other hand, Android Central says there are 1.4 billion active devices. It's unclear how many people are using Android Pay (the new name for Google Wallet), but the Google Play Store says there are between 50 million and 100 million Android Pay installs.

Credit card companies threatened

According to CNBC, Google's parent company Alphabet has come up with the idea of ​​Cellular, which allows consumers to purchase apps without using a credit card. The lack of credit and debit cards has hindered the adoption of apps in many developing markets. Apple Pay supports debit and credit cards, and Apple also provides a contactless payment solution. This has put Apple at odds with banks on many things, one of which is security. In March 2015, the British newspaper The Guardian reported:

“Criminals in the U.S. are using the new Apple Pay mobile payment system to purchase high-ticket items using stolen identities and credit cards — often from Apple Stores.”

Another key point is the transaction fee. As Forbes said:

"Credit card issuers pay about 15 basis points or 0.15% for every transaction made using Apple Pay in exchange for Apple's guarantee that each transaction is good. This cost is difficult to pass on to consumers using the cards, so there is no incentive for credit card companies to promote Apple Pay. Credit card issuers are supporting Apple Pay, but reluctantly."

Blockchain may offer a solution

What if we use a P2P system? For example, blockchain.

Can blockchain provide a payment solution? There has been some talk that Google and Apple are interested in Ripple and its blockchain products. Ripple CTO Stefan Thomas told Pymnts.com that the companies want to learn more about blockchain:

“At these forums, we met people from these companies (Google, Apple, etc.), and we obviously noticed the problems they were having with the current card networks, and we thought Interledger was a good solution. We noticed that they were very interested in it, and they kept asking us to do presentations.”

He also said that big tech companies 'absolutely hate credit card issuers.'

So what is P2P? Does it allow companies like Apple and Google to set up their own payment systems and cut out the middlemen like Visa and MasterCard? As David Duccini of the Strength in Numbers Foundation puts it:

“Being a payment processor is anti-blockchain in my humble opinion. I think the real question is: when will consumers feel comfortable with a peer-to-peer payment system that doesn’t rely on a third party, just as they feel comfortable with cash?”

There is also the question of whether many small businesses are willing to accept credit cards, as they prefer to only accept cash. Perhaps digital wallet manufacturers need to do a reality check.