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Apple's New iWallet Patent Hints At New Killer App

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Image by Getty Images via @daylife

iWallet may be to iPhone 5 what Siri was to iPhone 4S.

As the world is focused on the new iPad from Apple (AAPL) and most of the speculation centers around iTV, the next big thing for Apple may be iWallet.

Apple already has millions of credit card numbers on file. Apple may introduce the next big killer app iWallet along with iPhone 5.

On March 6, 2012, without much fanfare the United States Patent and Trademark Office awarded Apple Patent Number 8,127,982.

The patent is disguised under the title ‘Parental controls’ and perhaps this is the reason it has not received much attention. A careful reading shows that iWallet is more of a reality than generally thought. Here is the abstract of the patent:

Various techniques are provided for establishing financial transaction rules to control one or more subsidiary financial accounts. In one embodiment, a financial account management application stored on a processor-based device may provide an interface for defining financial transaction rules to be applied to a subsidiary account. The financial transaction rules may be based upon transaction amounts, aggregate spending amounts over a period, merchant categories, specific merchants, geographic locations, or the like. The device may update the financial transaction rules associated with a subsidiary account by communicating the rules to an appropriate financial server. Accordingly, transactions made using the subsidiary account by a subsidiary account holder may be evaluated against the defined rules, wherein an appropriate control action is carried out if a financial transaction rule is violated.

Apple expands on the patent as follows:

The financial transaction rules to be applied to a subsidiary financial account may be defined and configured using a processor-based device. In general, the financial transaction rules may be defined by the holder of a primary account to which the subsidiary account is associated. By way of example, the relationship between the primary financial account holder and the subsidiary account holder may be that of a parent-child relationship, employer-employee relationship, or the like. The processor-based device may be additionally configured to transmit the financial transaction rules defined by the primary account holder to a designated financial institution that manages the subsidiary account. For instance, where the subsidiary financial account is a credit card account, the financial institution may include an issuing bank and/or a card association. The financial institution may store a record of user preferences associated with the primary and subsidiary financial accounts, and may update these account holder preferences based on the received financial transaction rules.

This is a fairly broad patent and may give Apple an advantage over competing systems such as Google Wallet from Google (GOOG). Apple will also find substantial competition from efforts of Visa (V), Master Card (MA) and Verizon (VZ).

If past is the prologue, Apple will implement electronic wallet better than existing players and Apple stock will rocket to $1000.

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The power to propel Apple stock much higher is likely to come from a new development that is not discounted in the price of the stock.  iWallet may be the app that does it.

About Me: I am an engineer and nuclear physicist by background. I have founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the Chief Investment Officer at The Arora Report, which publishes four newsletters to help investors profit from change. Please feel free to write me at Nigam@TheAroraReport.com. You can follow me here and get email notification when I publish a new article.

Full disclosure: Subscribers to The Arora Report are long Apple from $131 and have taken partial profits at $360, and $525.