These days, Bill Gates spends most of his time in
philanthropic endeavors. That’s been the case for more than half
a decade, as he officially stepped out of daily operations at
Microsoft

in 2008.

In a recent interview with
Bloomberg TV

discussing a wide range of topics including Ebola and Microsoft’s
new CEO Satya Nadella, Bill Gates also had some kind words about
Apple

‘s new Apple Pay service.

The U.S. is definitely not a leader in mobile payments

The Bill Melinda Gates Foundation spends most of its
efforts trying to help the poorest countries in the world,
particularly around health care. But now the foundation is also
including financial services as an area where it can do some
good.

One key problem that Gates identifies is that current
financial systems put low-income households at a distinct
disadvantage when it comes to the various fees that financial
institutions rely on for revenue. Improving efficiencies and
reducing fees will be critical to expanding the reach of
financial services to these demographics.

When it comes to mobile payments, some of the poorest
countries in the world actually have evolved their infrastructure
to accommodate a lack of traditional banks. Kenya has emerged as
a leader in mobile payments with its M-Pesa system, which was
launched in 2007. Since the system uses cell phones to facilitate
digital transfers and reducing the need to handle physical cash
when transferring funds, the costs are lower.

How Apple Pay is a “real contribution”

While Apple’s goal may not be to help reduce costs, Gates does
agree that Apple Pay has incredible potential for driving
adoption in developed markets and catalyzing the transition away
from legacy plastic cards toward cell phones as a viable payment
method. According to Gates:

Apple Pay’s a great example of how a cell phone that
identifies its user in a pretty strong way lets you make a
transaction that should be very, very inexpensive. So the fact
that in any application I can buy something, that’s fantastic.
The fact I don’t need a physical card anymore, I just do that
transaction and you’re going to be quite sure about who it is
on the other end, that is a real contribution.

And all the platforms, whether it’s Apple’s or Google’s or
Microsoft, you’ll see this payment capability get built in.
That’s built on industry standard protocols, NFC. And these
companies have all participated in getting those going. Apple
will help make sure it gets to critical mass for all the
devices.

Apple Pay will launch later this month in the U.S. only, but
the Mac maker says it intends to roll out the service to
additional countries in the near future. Considering the breadth
of partnerships that Apple has inked with financial institutions
and retail merchants, it will take a long time before the service
is ready for international expansion. Europe appears to be next
on Apple’s list.

Can Apple do more?

Apple frequently notes that it wants its products to enrich
people’s lives, but at the same time its positioning at the high
end of the markets it participates in limits its scope of
influence. That’s not to say that the company is uninterested in
broadening its potential customer base, but its tools for doing
so are limited given its premium strategy.

Apple is reportedly getting a cut of fees, which would
theoretically undermine the notion of
reducing

fees for lower-income demographics. However, Apple does carry a
lot of weight and could still lean on its financial partners to
make financial services more affordable for lower-income
demographics, particularly since the company is unlikely looking
at its cut as a meaningful revenue contributor.

The company has embarked upon various affordability
initiatives to increase the appeal of its products in emerging
markets, which may help its ability to address lower-income
demographics.

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The article
Bill Gates Thinks Apple Pay Sounds
“Fantastic”

originally appeared on Fool.com.

Evan Niu, CFA

.

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