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Why does Apple want to compete with Square and Venmo?

Recode’s Jason Del Rey explains on the latest Too Embarrassed to Ask.

Apple Worldwide Developers Conference Opens In San Francisco Photo by Justin Sullivan/Getty Images

Do you send money to your friends from your phone? If not, would you do it if Apple facilitated the transaction?

Apple apparently believes that enough people would answer “yes” to the second question. Recode’s Jason Del Rey reported last week that the tech giant is in talks with payments industry partners to launch a payments product, which would compete with the likes of Square Cash and Venmo, which is owned by PayPal.

“The truth is, a lot of people are still exchanging money the old-fashioned way — checks and cash,” Del Rey said on the latest episode of Too Embarrassed to Ask. “I think there’s room for a bunch of these. A lot of people don’t realize, in the startup world, that some banks have their own money-transfer services within their own customer bases that work pretty well.”

“Apple thinks iPhones are such an integral part of people’s lives, if they can make it maybe one step easier than some other services, they might be able to attract people who haven’t yet committed to a Venmo or a PayPal or a Chase,” he added.

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On the new podcast, Del Rey talked with Kara Swisher and Lauren Goode about what this under-wraps payments product might look like and how Apple could carve out a piece of the market. He said one of the main reasons Cupertino might be interested in such a product is because it would encourage people to add a credit or debit card to the iPhone’s existing virtual wallet, Apple Pay, for the first time.

That theory, that the indirect effects of a peer-to-peer payments service are what Apple’s really after, is believable because the payments themselves aren’t big moneymakers.

“That’s why I’ve thought it a bit bizarre, for example, that Square has continued to invest heavily in its Square Cash app,” Del Rey said. “It’s actually a money loser. It costs these companies a small amount to process each of these payments between each other, but they’re not charging anyone unless you use your credit card to fund your account.”

The discussions also reflect a potential demographic shift: Twenty years from now, he said, today’s millennials might prefer banking with Apple to a traditional bank.

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