Were it a stand-alone business, Apple's (Nasdaq: AAPL) iTunes would be huge. The segment is on track to produce more than $8 billion a year in what is surely high-margin revenue. A mixture of music, app, TV, and movie sales and rentals accounts for the bulk of that draw.

Impressed? Don't be. Apple is willfully leaving billions in potential revenue unclaimed.

The potential value of being a market leader
Instead of morphing into an all-purpose commerce platform, Apple has chosen to keep iTunes stuck in a niche even as Google (Nasdaq: GOOG) has made no secret of its intent to turn smartphones into digital debit cards.

The system works. Last weekend, I took my boys to see Marvel's The Avengers. We paid a modest $21 for the early showing, charged via Fandango's mobile screen using my Google Wallet account. On my iPhone 3Gs.

As a consumer, I'm grateful for the convenience that Google Wallet offered me in this situation. But as an Apple shareholder, I'm disappointed the Mac maker hasn't figured out a way to better integrate iTunes into the mobile experience. Shouldn't it be possible to generate an iTunes pop-up screen when I've navigated to a "buy now" screen?

Perhaps I shouldn't care. But it's frustrating to look at Apple's surging share of the smartphone market and not wonder what iTunes could become. I'll grant we're far from eliminating cash as the currency of record, but when an increasing number of us carry smartphones – and, accordingly, an increasing number of retailers and platform owners target said smartphones with marketing messages -- building a better payments system only makes sense.

Bite into this big market
Tens of billions of dollars could be at stake. Consider PayPal. The eBay subsidiary handled $4 billion worth of mobile payments last year, and that's without having an app equivalent to Google Wallet. Start-up Square, founded by Twitter's Jack Dorsey, expects to process another $4 billion in mobile transactions this year. How is it that Apple is ignoring this opportunity?

Maybe there's a plan to buy Square. Or perhaps a team is redesigning iTunes to do more. Or maybe there's a skunkworks project under way that, when finished, will altogether change how we think of mobile payments. Whatever the Big Idea is -- presuming there is one -- there are at least five ways iTunes could add value as a payments platform:

1. Instant checkout. Imagine finishing a nice dinner out and leaving, on your own time, without ever having to ask for a check. Apple could enable that via a deal with OpenTable (Nasdaq: OPEN). Reserve online with your iTunes login and then let the reservations system manage the bill -- either automatically, charging your account for the bill plus a standard gratuity, or an amount of your choosing.

2. Movie tickets. See the example above. Had arriving at the Fandago purchase page led to a pop-up asking whether I'd be interested in purchasing with my iTunes account, I would have clicked "yes" and moved on. And revenue that went through Google would have instead gone through Apple.

3. Social buying. Thanks to American Express, it's now possible to get deals on the go -- right when you use social networks to check in to popular locales. Why can't iTunes get in on this action? Just sync your accounts as you would with your Amex card. That way, whenever you took advantage of a serendipitous deal, you'd get the option to kickback a credit to your iTunes account rather than just accept cash back.

4. Mobile couponing. Both LivingSocial and Groupon (Nasdaq: GRPN) aim to get us buying more while out and about. Instead of profiting from serendipity, as would be the case in the scenario above, you'd search for deals in the area and buy directly with your iTunes account before shopping. Everyone wins.

5. Travel extras. Chances are you already use a smart device to e-check-in while traveling. Airlines are increasingly using this process to sell invoice-based products such as premium seating or mileage earning enhancers. Why not list iTunes among the payment options? Fewer clicks could lead to more sales. Again, everyone wins.

And that's just a sampling. Think about what might happen were Facebook (NYSE: FB) to transform Credits from a neat way to buy goodies for Zynga games into a full-fledged Mobile Wallet. Will it happen? I think so; yet even with a strong mobile app and payments system our analysts see Facebook as a distant second to this social-media winner.

Meanwhile, Apple CEO Tim Cook is sitting on a potential gold mine. Seize the opportunity to make iTunes into the platform it could be, sir. The market won't wait forever. And if you're looking for more info on why investors should be piling into Apple, you can always check out our new premium research report. In it, our senior technology analyst gives the unique pros and cons that Apple faces and what they mean for investors.