Apple recently announced the launch of a new money transfer service that will allow iPhone and iPad users to send and receive money digitally using iMessage. The new feature will be automatically included with Apple Messages in the company’s newest operating system, iOS 11, which will be available this fall.
The money transfers will be funded with credit or debit cards, but will rely on a new feature, a virtual prepaid card called Apple Pay Cash, which will let people use the money they receive via the new money-transfer service to make Apple Pay purchases online or in stores that accept tap-and-pay transactions.
Once launched, the service will compete with a raft of payment services, such as those from Facebook and PayPal’s Venmo, that pair P2P payments with social networking, as well as popular bank services like Chase QuickPay.
While Apple is expected to introduce a new phone, the iPhone 8, the new OS will be compatible with phones as old as the iPhone 5s. Industry experts believe the new payment system will introduce new users to Apple Pay, particularly younger consumers who don’t have their own traditional debit or credit cards.
This new payment option may upend traditional consumer banking habits, but the good news for credit card processing services is the funding-source requirement of using a debit or credit card. Money-transfer services backed by a debit card will be free for users, while those backed by a credit card will be hit with a 3% fee, the same as competitors.
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