This is big. They are leveraging the convenience of Apple Pay to steer people to spending received money in a way that earns them interchange fees. This allows them to support sending money via cards without losing money on it.
The trick with P2P has always been how to make it free, easy to use AND not lose money doing it. No one has done all three. Square Cash supports cards but loses money (debit interchange is at least 22 cents). Venmo uses cheap ACH transfers but requires linking bank accounts.
Apple Pay is going to let you send money from cards just like Square Cash, yet it looks like they (or rather their partner Green Dot) are not going to lose money doing it. The trick is, while you can transfer it out to a bank account the easiest thing is to just spend it with Apple Pay. Looks like whenever you pay with Apple Pay and have an Apple Cash balance it will steer you to spending that. Apple / Green Dot then earns interchange on that transaction, offsetting their initial cost.
In fact if there are on average >1 Apple Cash transactions per P2P transfer, they actually MAKE money on the system! Brilliant.
The trick with P2P has always been how to make it free, easy to use AND not lose money doing it. No one has done all three. Square Cash supports cards but loses money (debit interchange is at least 22 cents). Venmo uses cheap ACH transfers but requires linking bank accounts.
Apple Pay is going to let you send money from cards just like Square Cash, yet it looks like they (or rather their partner Green Dot) are not going to lose money doing it. The trick is, while you can transfer it out to a bank account the easiest thing is to just spend it with Apple Pay. Looks like whenever you pay with Apple Pay and have an Apple Cash balance it will steer you to spending that. Apple / Green Dot then earns interchange on that transaction, offsetting their initial cost.
In fact if there are on average >1 Apple Cash transactions per P2P transfer, they actually MAKE money on the system! Brilliant.