Some new competition "Apple Pay Cash"

Apple’s forthcoming Apple Pay Cash will likely become the next in a long line of P2P offerings that are forcing credit unions to think about the future of their noninterest income, industry experts say. 

Apple Pay Cash, which launched in public beta this week, allows users to send and receive money in Apple Messages. They can use money with Apple Pay Cash in stores, on the web or in apps. The feature also works with Siri, and a member can use cards already in their Apple wallets, according to the company. There is no fee to use Apple Pay Cash with a debit card, but there is a 3% fee to send money using a credit card. 

Apple isn’t the first company to launch a P2P product — but it is one of the biggest. And that can be an opportunity for credit unions, according to Mark Ranta, who is head of digital banking solutions at ACI Worldwide in Naples, Florida.

For one thing, Apple Pay Cash could actually push members to use their debit cards more often, he said.

“If you want to look at the positive, there has to be an interchange to get the money into the ecosystem,” Ranta explained. 

“Now, what [credit unions] will miss out on is the money moving back and forth…the money moving from one iMessage to another,” he added. “But they weren't playing in that space today, anyway. So from a credit union perspective, I actually think it's a good situation because you're actually trying to move more of the commerce to a digital arena.” 

P2P is often a substitute for handing over cash, Ranta added.

“The attack isn't necessarily on interchange here, because the real attack is on cash,” he said.

Filene Chief Knowledge Officer George Hofheimer told CU Times it’s too soon to talk about possible negative effects on the interchange. 

“Still, credit unions should monitor this important source of at-risk revenue closely. With the advent of new competition like Apple Pay Cash, Venmo, Zelle and Square Cash, the threat to the interchange business model certainly exists,” he added.

“The question is when or if the new competitors will operate outside the current payment rails and truly disrupt the credit union interchange model,” Hofheimer said. 

Monetizing P2P services has been a challenge throughout the financial services industry. P2P might not generate much revenue for transactions that move money from person to person, Ranta noted, but there may be an opportunity to capitalize on money movements between people and businesses. 

For now, the bigger opportunity may be in using the product to build brand equity for credit unions, he explained. Providing Apple Pay Cash and other popular money-movement tools helps credit unions shows they’re able to keep up with the pace of modern technology.

“Apple has a pretty big marketing engine, and just saying that you have the capability to work with Apple goes a long way,” Ranta said.

CUTimes