Apple to take on Facebook, Paytm with digital payments within iMessage

Apple has announced that it will enable person-to-person (p2p) payments within its instant messaging service iMessage with the roll-out of its latest mobile operating system iOS 11 later this year.

The service will be made available through Apple Pay, the company's proprietary payment service that currently allows users to pay for things in stores, on the web and within apps. 

While Apple Pay is not available in India yet, over the past one year the company has made at least five patent applications with the Indian patent office for innovations related to digital payments. The announcement was made on Monday at its Worldwide Developer Conference (WWDC).

For p2p payments, Apple will not route money through a user's credit or debit cards, but through an Apple Pay Cash Card. The move will put Apple in contention with services similar to Paytm, essentially making Apple Pay a digital wallet which will store money that a user will be able to transfer into a bank account or pay at any place that accepts Apple Pay.

While Apple has confirmed that p2p payments will go live within iMessage, it is not clear if the feature will be available outside of the company's instant messaging service. 

The company's move seems to mimic social networking giant Facebook's which has already begun testing payments within its messenger service and is also bringing it to WhatsApp.

Facebook has applied for a patent with the Indian patent office for a payment service that will be baked right into an instant messaging platform. 

From an Indian context, while Facebook has 184 million users and subsidiary WhatsApp has 200 million users, the number of users on iMessage is extremely small.

iMessage is the default messaging service on Apple devices and is locked only to its own ecosystem. With just 3 per cent of smartphones sold in India being iPhones, the base of iMessage users is expected to be minuscule. 

Further, with local services such as Paytm and Bharat Interface for Money (BHIM) that are operating system agnostic, it is to be seen if global players are able to make a dent in India's fast-growing digital payment space.

Moreover, with India's Unified Payment Interface (UPI) picking up steam, a digital wallet that isn't interoperable with other banks and services might not get far. 

In fact, officials at National Payments Corporation of India (NPCI), the body which built and operates UPI has said that WhatsApp and Google are both looking at integrating with UPI to enable p2p and merchant payments on their platforms.

While the entry of cash-rich global players such as Facebook, Google and Apple into India's digital payment space could put pressure on local players, it seems almost certain that each player will have to adopt India's open payment architecture for their services in India.