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Apple to develop digital wallet in next year or two, says analyst

The iPhone maker may tap into NFC or a different technology to cook up a digital wallet for iOS users, says analyst Gene Munster.

Apple could offer a digital wallet system in the next year or two.
Apple could offer a digital wallet system in the next year or two. CNET

Apple may finally step its toes into the digital wallet world over the next year or two, forecasts Piper Jaffray analyst Gene Munster.

The analyst believes a payment option for iOS users may launch with the iPhone 6 in the first half of 2014. Apple will use a technology other than or in addition to near-field communications (NFC), but its system will work with existing mobile payment solutions.

The company already has one major asset ripe for a digital wallet system -- its users.

Apple holds the key to around 500 million iTunes users and their linked credit cards, which Munster believes is the largest database of payment information owned by any one company. As of January, those 500 million accounts represented a 60 percent growth rate from the prior year. In comparison, PayPal had around 120 million accounts as of last year's fourth quarter, a growth rate of 15 percent from a year earlier.

Still, Apple would face challenges if it forged ahead with its own mobile payment system.

Such a system would rely on mobile ads from advertisers and retailers. But Apple has been a relatively small player in the area of mobile advertising, according to Munster.

Apple would also need to focus on retail partnerships and security. The company does have relationships with key retailers such as Walmart, Target, and Best Buy, which could be a good starting point.

Apple's purchase of security provider AuthenTec may pave the way for iOS devices equipped with fingerprint readers. That type of biometric technology would be key since the traditional passcode system has proven vulnerable to hacking.

A hole in iOS 6.1 allowed anyone to break through the passcode to make phone calls and listen to voice mails. Users already wary of NFC over security issues would need strong assurance that their devices would be safe from such exploits.

How big an opportunity would a digital wallet be for Apple? Munster said it's unclear at this point but does believe it could have a ripple effect.

"If Apple can recreate the wallet, it would create tremendous stickiness in terms of iOS mobile products," the analyst said in an investors note out today.

So far Apple has been a holdout in the area of mobile payments. The company took its first steps last year with the debut of Passbook, which allows users to store digital tickets and coupons. But iOS does not yet support NFC.

Android, BlackBerry 10, and Windows Phone 8 do support NFC. But mobile payments have yet to take off among consumers.