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Whether through its Apple Pay mobile wallet or a new, person-to-person payments network reportedly in the works, Apple [stckqut]AAPL[/stckqut] wants to be at the center of consumers’ financial lives in the same way it has changed the way people communicate, listen to music and, if other ventures are successful, watch TV and even drive. Given Apple’s track record of disruption, the company’s plans could put the traditional financial services industry on the defensive.

The gadget maker is said to be in talks with several major banks to launch a personal payments service that would allow, say, friends to split a check or emigrants to send money back home via their iPhones. It would compete with existing services like Square, Android Pay or Venmo, which is operated by PayPal [stckqut]PYPL[/stckqut]. PayPal has seen its share price tumble since reports about Apple’s initiative emerged.

The Wall Street Journal said that Apple may launch the venture in partnership with JPMorgan Chase [stckqut]JPM[/stckqut], Capital One Financial Corp. [stckqut]COF[/stckqut], Wells Fargo [stckqut]WFC[/stckqut] and U.S. Bancorp [stckqut]USB[/stckqut].

The service could be a boon for those financial institutions in the short term. Although they would have to cede a portion of so-called interchange fees to Apple, likely about 15 percent, they could make up the difference in volume if an Apple-branded service encourages a spike in electronic payments. But longer term, market watchers say, the banks risk becoming an anonymous transaction engine rather than the all-encompassing service providers that currently play a central role in consumers’ financial lives.

Source: Apple Inc. Wants To Be Your Bank, And The Big Banks Should Be Worried

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Silicon Valley’s armies of disruption are used to certain, and often quick, victory. But in the war for the future of payments, established financial giants aren’t going to raise a white flag.

That was evident last week when J.P. Morgan Chase [stckqut]JPM[/stckqut] lifted the wraps on its revamped Chase Pay service, expected to launch next year. The service will only be available to the bank’s customers, though that is a large base to build from. J.P. Morgan claims about 94 million holders of its credit, debit and prepaid cards.

That will increase the competitive pressure for companies like PayPal [stckqut]PYPL[/stckqut] and Square; the latter may go public next month. Those companies are racing to sign up merchants to their own systems, as is Apple [stckqut]AAPL[/stckqut]. It launched its Apple Pay service a year ago. At the time, many expected Apple to quickly dominate the payments sphere, as it has done in many other areas.

But Silicon Valley enthusiasts are likely underestimating the ability of the big banks to defend their turf. The banks have been in a fiercely competitive environment for years, battling each other tooth and nail for market share. And with new regulations putting pressure on many of their businesses, they are incentivized to expand less capital-intensive areas such as credit cards and digital payments.

Source: What Chase Pay Means for Silicon Valley – WSJ