Apple’s Next Goal Is Killing Paper Money Once and For All
Apple CEO Tim Cook has an idea for the future—eliminating cash.
Apple Pay could be the “catalyst” that ultimately gets the world to switch from cash to digital payments, he told the Japanese news service Nikkei in an interview published on Monday.
“We would like to be a catalyst for taking cash out of the system,” Cook said. “We don’t think the consumer particularly likes cash.”
Apple (AAPL) released Apple Pay, a digital payment service, in 2014. Users who store their credit cards, debit cards, and gift cards with the service can pay at checkout in stores by waving their iPhones near a terminal. Taking out cash or a credit card is unnecessary. Apple Pay’s top competitors in mobile payments include Samsung and Google.
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The challenge initially for Apple was to get banks and retailers to sign onto the service. But in the last two years, Apple has recruited a number of new banks, stores, and ATM locations. Recently, Apple announced that Apple Pay will work with FeliCa, a mobile-payment standard in Japan that allows Apple to quickly roll out Apple Pay in the country.
It’s unclear how Apple could achieve Cook’s goal of eliminating cash. Apple Pay must be linked to plastic to work, and while smartphones and payment terminals are ubiquitous in the U.S., that’s not the case in most other countries. And even then, Apple Pay is only compatible with Apple’s own products, leaving the more than a billion people worldwide who use Android-based handsets out of luck. And that says nothing of people whose phones use other operating systems and people who don’t own smartphones.
Therefore, the idea that Apple Pay could replace cash seems unlikely in the near term. Even if Apple is one of several companies offering a mobile-payment option, it’s far more likely that credit and debit cards would be the first casualty to mobile payments. Cash, if it ever dies, would likely be killed off sometime after.
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Still, Cook’s comment on Apple Pay is notable. Apple Pay competes in a fledgling market and isn’t generating substantial revenue for Apple. Cook’s hopes for a cashless future suggests he’s bullish on the technology’s potential and believes Apple Pay could eventually become a major part of Apple’s business. Apple is believed to take a 0.15% cut on all Apple Pay transactions in the U.S. Rates vary elsewhere around the world. The notoriously secretive Apple hasn’t publicly shared the fees it charges banks on Apple Pay transactions.
But Apple Pay might not be the only tool that Cook believes will make a big impact on Apple. He told the Nikkei that artificial intelligence, a technology that allows computers to think more like humans, will play a major role in the company’s future. Cook said that Apple would like to see artificial intelligence used to “increase your battery life” and “help you remember where you parked your car,” for example. Last week, Apple announced that it would open an artificial-intelligence-focused research-and-development center in Yokohama, Japan.