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Apple's iPhone Will Become Legal Tender

Stocks in this article: AAPLMAVINTUEBAY

As strong as PayPal is, I don't think anyone ever thought it would threaten big credit card companies like Visa (V) and Mastercard (MA). But Apple certainly can. According to sources, Apple's new iPhone, presumably to be called the iPhone 5S, will be equipped with fingerprint-scanning technology. This is precisely the sort of feature integration with the capability to push mobile payments/wallet further.

Besides, as I've written recently, Apple has already begun the checkout process with Wal-Mart Stores (WMT).


It has now gotten to the point where some analysts are suggesting that Apple could actually be a threat to payment processing systems like VeriFone (PAY). Why would Apple avoid this?

Essentially, no longer will it matter whether Samsung or Google are winning the mobile device race. If Apple gets a cut of the transaction, Apple would profit each time someone chooses to buy a Galaxy S4 over an iPhone. Getting into mobile payments will be the surest way to believe Tim Cook, who recently proclaimed that Apple is a software company.

It's a no-brainer. It's worth asking, then, what sort of chance does PayPal really have in the long term, especially given Apple's mobile/app advantage? One has to consider that an encrypted iPhone armed with biometrics is as good as gold. Or in this case, cash.

At the time of publication, the author was long AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
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