X) Transactional Payments

- for goods and services

ApplePay (people able to pay for everyday goods and services with their smart phone, ie apps are replacing cash, cheques and credit cards with fingerprint readers on recent iPhones to confirm identities, ie security. This will provide a convenient and secure mobile payment system, ie wirelessly transmitting a one-time code along with an encrypted customer data, which is claimed to be more secure than swiping traditional credit cards). It is an improvement on Google Wallet which was hamstrung by limitations on the types of phone and cellular networks' compatibility; a similar story applies to Softcard (backed by major wireless carriers) and is a challenge to PayPal (it started in 1998 and eBay purchased it for US $1.5 b. in 2002), which has dominated the digital payment system (now has 150 m. regular users with revenue of around US $6.6 b (2013); as a result, eBay is spinning off PayPal so that it has the speed and flexibility to defend its market against ApplePay. Also, PayPal brought Braintree (a competitor payment startup) in 2013

AliBaba (huge Chinese e-commerce company that forced eBay out of China) is a potential competitor with the likes of other smart phone manufacturers, eg Samsung & Microsoft

ApplePay has already won the support of Square (a prominent payment start up), Stripe (a payment processing start-up based in San Francisco); others, including McDonald's, Whole Foods and Macy's are signing to use ApplePay

Another example of Apple using disruptive innovation to upend an industry. Previous examples include

i) iPod (revolutionised how consumers buy digital music)

ii) iPhone (changed the way people use their mobile phones in daily life)

NB Only 11% of e-commerce spending happens on mobile devices (mid 2014); the rest are made on desktop computers as it is easier to enter payment information on the desktop than on a smart phone