Apple has announced that its new iOS 11 operating system will enhance Apple Pay by including a feature that allows direct peer-to-peer payments through text messages.
With the new service, users will be able to send and receive money inside Apple’s iMessage app, authenticate payments with Apple’s Touch ID fingerprint sensor, and store the money they receive on an Apple Pay Cash Card until they withdraw it or transfer it to someone else.
The service, which will launch first in the U.S. this fall, will put Apple Pay in direct competition with PayPal’s Venmo, a leader in the growing peer-to-peer payments market.
“Even before Venmo came on the scene, Forrester Research estimated person-to-person payments would reach $17 billion by 2019,” International Business Times noted. “Google Wallet enabled peer-to-peer money transfers in 2015 while competing apps like Samsung Pay are still working to make person-to-person payment options widely available.”
Apple said Apple Pay is now accepted at 50% of U.S. retailers, totaling about 5 million locations. “The new peer-to-peer aspect of Apple Pay might entice more people to use the service,” CNET said.
Peer-to-peer payments allow one user to pay another one through their smartphone. Users of the new Apple Pay service will be able to use a debit card or the virtual Apple Pay Cash Card to make payments without being charged a fee; credit card transactions will incur a 3% fee.
“Industry insiders believe the virtual debit card will be a way to introduce Apple Pay to new users, perhaps to younger consumers that don’t already have their own traditional credit or debit cards,” Recode said. “That, in turn, could boost usage of the Apple Pay service, which has been underwhelming in the nearly three years since it launched.”
Other competing services include PayPal, Square Cash, and Chase QuickPay. “Unlike many competitors, Apple’s cash-sending feature is limited to users of iPhones, iPads and Apple Watches,” Recode noted.