Apple's Beef with Cash

No place for paper money in a mobile wallet.

Oh, Apple, why hast thou banned Benjamin Franklin from thy Apple Store?

Earlier this week, a Silicon Valley Apple Store refused to sell an iPad to a woman, Diane Campbell, who had saved up a bunch of greenbacks to make the big purchase, reported a San Francisco news station.

"It's sort of astounding to think here is this U.S. dollar, this money put out by the U.S. Treasury Department, and it's being turned away," Alan Fisher of California Reinvestment Coalition, advocates for low-income consumers who have trouble getting credit or mortgages, told the news station.

Disabled and on a fixed income, Campbell apparently doesn't have a credit or debit card. Yet an Apple policy states: "iPad purchases are limited to two per customer and must be purchased with a credit card or debit card only." The same is true for the iPhone, except a customer can purchase up to five.

Campbell said a store clerk told her that the policy prevents someone from buying a bunch of iPads, leaving the country and reselling them on the black market for three times as much as much as the original Apple retail price.

(Of course, Apple's policy didn't stop about a hundred people from buying 200 iPads on opening day and then selling them in Hong Kong two days later, reported by CNN.)

The thinking goes that a credit or debit card provides an electronic trail to an individual. It's also much less messy than handling paper cash. Come to think of it, even physical cards can be cumbersome and ultimately lead to a George Costanza-like oversized wallet.

In fact, Apple hopes the iPhone can become the nirvana of wallets—that is, the much-dreamed-about sleek mobile wallet that replaces bulky leather ones. Already iPhone apps double as Starbucks payment cards and Safeway rewards cards.

Visa plans to begin trials of a contactless payment system for the iPhone. The credit card giant is working with DeviceFidelity to develop an iPhone case that works with Visa's payWave contactless payment system. A transaction is completed by waving the phone in front of a contactless payment terminal.

Text messaging is also gaining steam as another form of mobile payment. The American Red Cross raised $7 million for Haiti earthquake relief efforts in only two days via text messaging from more than 700,000 wireless customers. "It was a major validation about the possibilities of text and mobile commerce and what we're going to see in the future," says Gartner analyst Jeff Roster.

Old-world paper cash, it seems, doesn't fit in Apple's vision of a brave new m-commerce world.

Tom Kaneshige is a senior writer for CIO.com in Silicon Valley. Send him an email at tkaneshige@cio.com. Or follow him on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline.

Copyright © 2010 IDG Communications, Inc.

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