Apple (s aapl) has reportedly hired near fields communications (NFC) expert, Benjamin Vigier, a move that could help turn future iPhones into mobile wallets by using short-range wireless signals. Some handset companies, such as Nokia (s nok), have recently invested in NFC for mobile handsets, but adoption is slow at best, even though mobile payment transactions are expected to reach $633 billion by 2014. Given the Cupertino company’s history in technology trend-setting, the hiring of Vigier positions Apple to become a change agent by integrating NFC features in mobile devices.
Consumers generally don’t want what they can’t understand, and if you polled people about NFC, most would likely confuse the technology with the NFL’s National Football Conference. The combination of Vigier’s hiring and Apple’s NFC patent library does make for a potent Joe Montana – Jerry Rice tandem that could score a touchdown for near field communications adoption. Vigier’s past includes the conception and implementation of PayPal Mobile (s ebay), as well as the Starbucks’ (s sbux) mobile payment system, which uses barcodes on a smartphone to make purchases. Clearly, Vigier knows mobile payment platforms, and he’s also implemented an NFC Wallet app for a top U.S. bank. Combine his background with Apple, which is second to none when it comes to simplifying powerful technologies for consumers, and we may soon carry phones instead of wallets.
The new FaceTime feature on the iPhone 4 is an outstanding example of Apple’s ability to take an existing technology and make it easy for consumers to use, as if the function is magic. Prior to Apple’s debut of the video chat service this past June, several companies have offered both hardware and software for mobile video chat. I used Fring, for example, on a few Nokia handsets that offered front-facing cameras long before FaceTime was available, so Apple certainly didn’t “invent” mobile video chat. However, Apple has pushed the technology for video calls on phones to a large number of consumers in a short time: 1.7 million people gained video chat capability in the iPhone 4’s first three days of availability.
So while Apple didn’t invent video calling by any means, it doesn’t matter to the end user. Consumers see a fun, cool feature that’s easy to use, and that’s the power Apple wields as a change agent. By allowing Vigier to implement some or all of Apple’s NFC patents, Apple could be the company that enables millions of consumers to pay for goods by waving their mobile device near a payment terminal. However, Apple’s potential inclusion of NFC technology in mobile devices won’t guarantee widespread use, even if the company has the best shot to gain consumer acceptance where others have failed (GigaOM Pro, subscription required).
Currently, brick-and-mortar stores have little incentive to purchase compatible terminals that can accept NFC signals, since few phones support such wireless payment methods. In addition, there are still security ramifications to overcome, both real and perceived. Not even a “magical and revolutionary” NFC function from Apple will assuage all consumer fears of allowing their phones to take the place of wallets. Lost devices and concerns about would-be thieves wirelessly stealing credit card and other data from a handset are still big obstacles to overcome, but Apple is the best chance for mainstream use of near field communications.
Apple isn’t alone in attempting to increase mobile payment adoption, however. Verizon Wireless (s vz), AT&T (s t) and Deutsche Telekom, owner of T-Mobile USA, are reportedly working together on the Mercury project, one payment platform effort for U.S. smartphones. Mercury could put pressure on any Apple NFC efforts; what was, up to now, a slow uptake for NFC might soon be a race to set the standard. Why might Apple want to win such a race over the carriers? Apple could license related technologies, or take a piece of every purchase transaction in the form of fees, just as it does with the iTunes Store. Plus, an iPhone with NFC could turn the handset into a nearly indispensable device if Apple applies NFC to other markets. You just might use an NFC-enabled phone to unlock the door when you arrive home, turn on the lights when you enter a room or start your car in the future.