When will Apple enter crypto?

More big names are in crypto these days, including the US government Recently Joe Biden signed an executive order on crypto, aimed at advancing the “U.S. competitiveness and leadership” in digital assets and crypto ecosystem. But, as Derick David writes at Forbes, the one big name a good number of the crypto community are waiting for is – Apple!

Apple has been extremely quiet about crypto. The last time we heard anything from the company was in 2019 when Apple Pay’s VP Jennifer Bailey said the company was “watching cryptocurrency” and strongly believes it has “interesting long-term potential.” In February 2020 it hired Warner Music’s former head of technology innovation, to work on blockchain projects for digital assets, and in November 2021 Tim Cook told the new York Times that Apple was looking into the possibility of accepting crypto through Apple Pay. But since then we’ve heard nothing.

Instead, Apple Pay launched a new feature in February 2022. This allows retailers to use their iPhones to accept instant payments and is called Tap to Pay. It could be used for crypto, but it isn’t.

However, there was one interesting development in March this year: Metamask, one of the most used crypto wallets, announced its support for Apple Pay so people can buy crypto directly from their wallets. Derick David points out that at the same time as this announcement, Apple advertised for new legal counsel “with expertise and experience on blockchain, digital assets, and payment platforms.”

Around the same time, Apple acquired Credit Kudos, a UK-based fintech startup, bringing a range of payment functions in-house. This gives Apple the potential to offer a crypto service that would enable people to buy products, save or invest money, and pay their bills with crypto or fiat – if Apple chooses to adopt crypto! The combination of Credit Kudos and Apple Pay could “help billions of users have a frictionless banking and payment experience,” as Derick David says.

Why is the crypto community so anxious for Apple to come on board? It’s simple really. Apple is in a unique and powerful position to best support crypto. It has over one billion active iPhone users and fans of the brand follow “their software and hardware ecosystem and hundreds of thousands of people wait in excitement for their Keynote events and product releases.”

The Apple ecosystem could supercharge crypto adoption, simply because it would offer seamless integration through their products, a global reach, and a cult-like following.

It is still keeping quiet for now, but when it does decide to make a crypto move, expect big, big positive changes for crypto.

Over 50% of world will use mobile wallets by 2025

Boku, a mobile payments company, has recently published a study indicating that more than half the world’s population will be using a mobile wallet by 2025. At the moment mobile wallet usage is at around the 2.7 billion mark, but in four year’s time it could be 4.8 billion.

Usage is growing fastest in Southeast Asia, which has shown a 25.5% CAGR and an expected overall growth of 311% in the next five years. E-commerce is driving this growth alongside app such as Grab and Gojek, and the biggest rise in numbers of users is in the Philippines and Indonesia.

Southeast Asia is followed in growth terms by Latin America, Africa and the Middle East. Growth is particularly high in those areas where wallets offer access to financial services for the unbanked. In Africa and the Middle East, usage of mobile wallets is expected to grow by 166% and 147%, respectively, by 2025. Growth in both these regions is being catalysed by the increasing usage of mobile money services, such as M-Pesa, which are offering improved access to e-commerce.

In those world regions where people already have relatively easy access to financial services, such as in North America and Western Europe, the growth in mobile wallet use is much slower. Uptake is only expected to be 65% (North America) and 50% (Western Europe) by 2025.

Nevertheless, markets such as the UK are seeing a spike in card-based mobile wallets, due to the adoption of contactless spurred on by the pandemic, and Boku believes that three quarters of Europeans will be using a digital wallet by 2025.

“We are witnessing a paradigm shift in payments driven by mobile wallets,” says Jon Prideaux, CEO at Boku. “Mobile wallets have lowered the barrier to making digital payments and ushered billions of new consumers into e-commerce. These consumers are not in North America or Western Europe, they are in emerging markets, and while they don’t have credit cards, they overwhelmingly have mobile wallets. For global merchants, mobile payment acceptance is not about accepting one type of mobile wallet or another, but ensuring that consumers in every market will have the required selection on payment types in order to monetize transactions.”

HSBC challenges fintechs with digital wallet

Major bank HSBC is challenging its fintech rivals by launching a multicurrency digital wallet, called HSBC Global Wallet, which will enable businesses to make simple and secure international payments.

The digital wallet is first launching in the US, the UK and Singapore and offers payments in Euros, sterling, Hong Kong dollars, Canadian dollars, Singapore dollars, Australian dollars and Malaysian ringgit. Curiously, there is no mention of US dollars!

According to reports, HSBC clients will be able to send money in a number of currencies, and hold and manage those currencies. However, the ability to receive payments will only be added later this year.

This is the latest in new product offerings from HSBC intended to appeal to its more digitally-minded clients. Last November it launched a free mobile-based service that customers can use to hold, manage and send funds in various currencies to HSBC customers in over 20 markets, 24/7 and in real-time without incurring any fees. This product –the HSBC Global Money Account – was aimed at wealthier customers, whereas the new digital product is primarily for small- and medium-sized businesses with international supply chains.

Diane S Reyes, HSBC’s global head of liquidity and cash management, said, “HSBC Global Wallet makes it just as easy for our customers to deal with a supplier or a client on the other side of the world as it is to deal with one on the other side of town.” She added, “By fully integrating this solution into our everyday business banking platform we’re giving our clients a virtual presence in markets around the world.”

What we are witnessing is an attempt by the banks to claw back business lost to fintechs, such as Transferwise (now Wise), Revolut, N26 and others that offer their customers borderless accounts. Even Santander bank in the UK is offering its PagoFX app to the UK retail market and sole traders, and it is also available in Spain and Belgium. The focus of the Santander app is on easy international payments with transparent fees and exchange rates.

This all sounds good, but there is one thing they have forgotten and that is cryptocurrencies and stablecoins. PayPal has moved into crypto and so have the major card networks, such as Visa and Mastercard. There are others as well. So, whilst the banks are attempting to appeal to those customers who moved to the new digital banks and draw them back (which remains to be seen, as HSBC doesn’t have quite the same hip appeal as Revolut), there is a swathe of people who want more advanced features, such as being able to earn money on crypto, lend or borrow against it, and trade it, all in one place.  No doubt, HSBC’s new products will gain traction with its loyal customers, but whether it will win them new ones is another matter.

Will cryptocurrency help Mastercard to grow?

It could have been the case that Mastercard ignored cryptocurrencies and the fintech revolution in payments, but the opposite is true. As one of the leading payment networks in the world, it has instead forged relationships with startups, and even added new products to its core range.

Now, as cryptocurrencies are showing strength, Mastercard is once again demonstrating its flexibility by supporting cryptocurrencies.

According to Trevor Jennewine, Mastercard’s data reveals “as many as 20% of consumers now own cryptocurrency in certain countries,” and merchants and financial instotutions are taking notice of this. Last year Mastercard expanded its cryptocurrency programme last year, making it easier for partners to issue crypto payment cards.

In the USA, Mastercard has teamed up with Bitpay – a payment processor that allows merchants to accept digital currencies like Bitcoin at checkout – and launched a prepaid crypto card in June 202o. This card allows consumers to make in-store and online purchases anywhere Mastercard is accepted, with funds loaded from their BitPay wallet. Consumers can load their card with BTC (Bitcoin), ETH (Ethereum) and other cryptocurrencies and BitPay converts those funds into fiat currencies, such as USD, EUR and GBP.

BitPay noticed a spike in transaction in July, one month after the launch, and has recently added support for Apple Pay so that customers can use an iPhone to make contactless payments.

In Europe, Mastercard has partnered with London-based fintech Wirex to launch a crypto debit card. This is a slightly different product to the BitPay card. The Wirex product allows consumers to spend up to 18 digital and traditional currencies in real time, meaning the funds are not converted until the moment a purchase is made. Furthermore, the Wirex card also allows consumers to earn 2% cash back (in cryptocurrency) on any in-store or online purchase.

Although the products may be slightly different, the one thing they have in common is this: at some point prior to completing a transaction, the cryptocurrency is converted to a fiat currency. This means that it’s fiat currency, not cryptocurrency, that’s flowing through the Mastercard network. But that is about to change.

Mastercard’s CEO Michael Miebach recently announced plans to add digital currencies directly to the company’s network. This means no more conversion to fiat currency, which should make it easier for consumers and merchants to adopt crypto payments.

This is an important move for crypto enthusiasts, because it removes one of the biggest arguments against cryptocurrency use, i.e. they are difficult to spend. Plus, for Mastercard, it adds another form of payments to its product range, and this could be a major growth driver for the network, especially if cryptocurrencies keep gaining traction.  It also shows forward thinking on the part of Mastercard.