The new service would be in direct competition with PayPal’s peer-to-peer payments app Venmo and Square’s Square Cash. Square Cash and Venmo are free to users that link their checking account to the system. Consumers using a credit card are only charged a small fee.
Venmo processed nearly $2.4 billion in money transfers in 2014. Square Cash has processed more than $1 billion in money transfers since its launch about two years ago. Square is now preparing for its initial public offering.
Peer-to-peer payment services have been increasing in popularity over the last few years. This year, Facebook offered users of Messenger a payment service that allowed them to send payments to friends. Google is experimenting with payments through its messaging service. Several banks are also trying to implement peer-to-peer payment products within their mobile banking apps.
A peer-to-peer payments product could increase Apple’s Wallet appeal for consumers and increase Apple’s share of the payments industry. Apple sees the peer-to-peer service as a way to involve customers more deeply with its products and to give them a product that allows them to leave their wallets at home.