Google Inc (GOOG), eBay Inc (EBAY) & Amazon.com, Inc. (AMZN): The Banking Industry’s Tech Nightmares Are Coming True

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Apple and Amazon

Although Apple Inc. (NASDAQ:AAPL) has been late in entering the payments game, its iTunes and App Store boast an impressive customer base of over 400 million — more than either PayPal or Amazon.com, Inc. (NASDAQ:AMZN). However, Apple’s payments are all linked to credit cards, and its payment transactions are used for digital goods, such as songs, videos and apps, rather than physical ones. To actually set up a dedicated payment system for physical goods, Apple Inc. (NASDAQ:AAPL) will have to expand its support infrastructure significantly.

Nonetheless, Apple Inc. (NASDAQ:AAPL) has patented various payment-related technologies over the past year, which are focused on peer-to-peer payments, wave-to-pay technologies, and fingerprint recognition. This has led to speculation that Apple’s upcoming iPhone 5S could incorporate many of these payment features, including NFC (near field communications) for seamless payments with brick and mortar retailers and peers.

Amazon.com, Inc. (NASDAQ:AMZN), on the other hand, has an extensive payments system linked to its ecosystem, but it requires a linked credit card account. As a testament to its rivalry with Google Inc (NASDAQ:GOOG) and eBay Inc (NASDAQ:EBAY), it does not accept Google Inc (NASDAQ:GOOG) Checkout or PayPal accounts. Although Amazon.com, Inc. (NASDAQ:AMZN) has the size and user base to add an integrated payments solution to rival PayPal, the benefits of adding that service do not outweigh the costs.

In addition, Amazon has shown that it is more interested in spending its revenue elsewhere, on new projects such as TV shows, and products such as its upcoming set-top box. However, there is a hidden threat for Amazon.com, Inc. (NASDAQ:AMZN) – if more brick-and-mortar companies start accepting lower merchant fee payment options such as PayPal and Google Wallet, then they could afford to offer slightly lower prices than Amazon.com, Inc. (NASDAQ:AMZN), which still relies on credit cards.

The bottom line

In the end, big banks and credit card companies need to realize that their era of dominating global payments could be coming to an end. Allowing the tech industry to handle our money instead seems like an attractive, viable alternative for the 21st century, and investors should closely monitor this revolution in the payments industry.

The article The Banking Industry’s Tech Nightmares Are Coming True originally appeared on Fool.com.

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