Apple, SIM Cards, And Payments

So here’s a question.

Apple is the biggest technology player in the world and a company that wants to dominate every ecosystem that it touches. Mobile. Music. Payments. So, does dominating payments mean Apple must also dominate the mobile market more broadly? Some say that it already does. But it’s a conversation that’s surfacing more often now that Apple has taken a couple of strategic moves related to a central element of mobile device itself: the SIM Card.

Patently Apple pointed out the SIM card vision for Apple for payments has been in the works for years.

“This has really been something that Apple envisioned long ago,” The article said, “In fact, Patently Apple covered Apple’s granted patent on such an invention back in 2012 in a report titled “Apple Wins Patent Relating to Nano SIM and iWallet Chip.”

Apple’s focus, though, at least recently, has taken a new turn. Apple’s recently released iPads allow users to switch wireless carrier without changing SIM cards. As The Verge reported, that could give Apple an advantage over the wireless carrier networks.

“The new technology, called Apple SIM, is only available in the new iPad Air 2 and iPad Mini 3, and limited to some carriers in the US and in the UK. It potentially paves the way for the company to include the same technology in the iPhone so it could just sell one device to people for them to set up with their carrier of choice later on,” The Verge article said. “In terms of the initial carriers, Apple says its new SIM technology works with short-term plans, like the monthly and on-demand data packages with AT&T, Sprint, T-Mobile, and EE in the US and UK. Notably missing on that US list is Verizon, though Apple notes that its list of carriers could change.”

The move, many say, is all about control over the mobile ecosystem, killing off a “clunky” and “slow moving” piece of technology that it can replace with its own technology or software-based SIMs that Apple can leverage into other innovations on its roadmap, including payments.

“It’s the death knell of the humble — if rather annoying — SIM card,” Extreme Tech reported, something the author believes shouldn’t be shocking.” Apple has always had it in for the SIM card. Ever since the first iPhone, which used a fiddly paperclip-actuated SIM holder, Apple has shown that it won’t be beholden to clunky, old, or slow-moving technologies that it has no direct control over.”

“The biggest question is whether re-programmable SIMs will find their way into smartphones—and in what form. Apple fans predict that the firm will soon release an iPhone with a pre-installed card that lets them switch providers. Some hope it will eventually take the next logical step, and replace the card with a softSIM, a piece of software code that does the same job.”

If that is indeed the plan, it might give Apple even more control over the mobile market than it already has. And perhaps set itself up as a competitor to some of the SIM-based schemes that some in the payments ecosystem have worked hard to ignite.

Admittedly, mobile payments and smart SIM cards have been around for years. MasterCard, for instance, launched its branded SIM card in 2011, working with mobile manufacturers during that time focused on getting SIM cards built into phones. Fast forward to today, and Britain’s three largest mobile operators have partnered with MasterCard to build a payments system that link bankcards to SIM cards. Issuers can enable their customers to use their mobile devices to make contactless payments via SIM cards at merchants that accept contactless payments.

“Customers of Barclays, for example, would be able to link their card to their phone using the Barclays app, after which the handset can make payments at tills with contactless readers already used for debit and credit cards,” the article said. “Mobile phone companies will also use the service for their own smartphone wallets.”

So, if Apple SIM becomes a part of Apple phones going forward, then mobile carriers and banks and networks alike will be working with it to enable their mobile payments vision.

What role Apple’s SIM will have in that digitally connected world when it comes to payments will depends on what Apple’s next move is and it’s received in the market.