Memo to credit unions: Here comes Apple

Apple wants to own your members’ wallets.

If you didn’t think Apple Pay was just the beginning, maybe a quick historical refresher will put things into perspective. Remember when the only carrier you could purchase an iPhone from was Cingular (Now AT&T)?  Believe it or not, that was 2007. It was contract exclusivity and it lead to tactics such as ‘jailbreaking’ and ‘bricking’: People wanted the iPhone, but not on AT&T’s network. Some experts believe Apple’s exclusive contract with AT&T was a trillion dollar blunder; did they realize there was more at stake than just money? Through this exclusive five year contract Apple received $10 from every iPhone customer’s AT&T bill and access to AT&T’s ‘backbone’ (this is the key).  AT&T received roughly 10% of iPhone sales from their stores and a small piece of iTunes revenue. Fast forward to the end of the 5 year contract. In 2012, Apple introduced iOS 5, which came with the mobile industry’s first WIFI text platform that was free from cellular network data costs – iMessage. This feature allowed anyone with an iPhone to send and receive messages even when they didn’t have a data connection by using WIFI. Today, iMessage is as popular in iOS 9 as it was when first introduced in 2012 and has led to Apple’s Multipeer Connectivity Framework, which can be used for everything from collaborative editing and file sharing, to multi-player gaming and sensor aggregation.

Apple announced Apple Pay in September 2014 with exclusive deals with the three major payment networks: American Express, MasterCard and Visa.  The joint project began in January 2013.  I don’t need to give you the history lesson on Apple Pay… it’s only a year old and you know the story.  The question the credit union industry should be asking, with the understanding of a little history of how Apple leveraged its relationship with AT&T to create iMessage is: ‘What is Apple up to now?’

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