Two reasons now might finally be the right time for iPhone to gain NFC

17 Comments

After years of ignoring Near Field Communications, or NFC, Apple appears to readying the technology for the iPhone 6. Sources told Wired on Thursday that NFC will be in the next iPhone, expected to launch on September 9 and on Friday, more details emerged: Financial Times reports that Apple is working with NXP, one of the leading NFC chip companies that already provides wireless chips for Android phones.

NFC On Mobile Orange Barclaycard

The NFC in an iPhone rumor has surfaced on a nearly annual basis for the past four years. So why now might it become reality? Two reasons spring to mind, although I have no inside knowledge of Apple’s plans; these are just my (hopefully) logical thoughts.

First, the card payment industry in the U.S. is woefully behind other parts of the world. Go to Europe or other overseas regions and you’ll find more advanced and more secure payment card techniques, such as “chip and PIN.” This requires a programmable chip with identifying information in the credit or debit card; similar to a SIM card in a phone. The PIN aspect is an additional layer of security, requiring customers to enter a unique code to complete the transaction while verifying the card presence at the terminal.

MASTERCARD PAYPASS WALLET SERVICES

Point of sale terminals overseas are obviously equipped to handle this type of two-factor payment, known officially as EMV, which stands for the three companies that developed it: [company]Europay[/company], [company]MasterCard[/company] and [company]Visa[/company]. Stateside, we’re not there yet. However, some payment processors are preparing for a change to the system.

[company]Square[/company], for example, is already prepping a new reader to handle payment cards with a chip in them, and many of the bigger payment terminal makers have introduced EMV in their newest U.S. products. The payment industry here is ripe for a change to advance the level of security that credit and debit cards provide; meaning now is a good time for [company]Apple[/company] to make use of the more than 800 million credit card accounts it has through the iTunes store.

With such clout, I wouldn’t be surprised if Apple has had discussions with the major credit card payment processing companies to help steer the direction of advanced mobile payments and the terminals required for them. Note too that NFC and EMV can work hand-in-hand to provide a contactless, more secure payment transaction.

Square EMV reader on an iPhone

Bear in mind also that there are also thousands of NFC or tap-to-pay terminals in the U.S. already. Even where I live in a fairly rural area of southeastern Pennsylvania, a quick search turned up 20 different merchants that have MasterCard PayPass terminals within a 5 mile radius of my home. Check your own location here and you might be surprised by availability.

There’s more to NFC than payments though. An oft-overlooked use of NFC is tap to pair. This is super useful when pairing two devices over a wireless connection, such as Bluetooth. It’s great for pairing wireless headphones or speakers to a phone, for example. And wouldn’t it be helpful to pair, say a wearable device, with your iPhone; perhaps an iWatch, which is also widely expected on September 9?

iwatch concept

It would be and it fits in with the simplicity and elegance of an Apple product. There are no PIN numbers to enter on a Bluetooth device with NFC: You can simply start the pairing process on a phone and tap the two devices together to establish the pairing connection. No muss, no fuss.

It will be like magic for the mainstream consumer that hasn’t yet seen how NFC makes life a little easier. So too will wireless tap-to-pay features in an Apple wallet app for the iPhone 6. And isn’t that what Apple tries to sell with its products: easy to use technology that appears like magic?

17 Comments

Steve

I am very curious how folks think BLE is somehow going to replace NFC? The whole concept of NFC is a device (chip) that does not require ANY power. As soon as you add the requirement to add power it completely defeats the purpose. Is BLE relavent? Yes, iBeacons will be a positive outcome of BLE. Is BLE a replacement for NFC… not in it’s current form, in which case Crapple is waiting for vapoerware to emerge., at any rate, NFC is here TODAY and Crapple’s refusal to add these NFC readers to their mobile devices is holding up progress in multiple industries… one reason business’s relationship has always been tenuous at best with Crapple. Since I am in one of those industries I sincerely hope that they make the move to add NFC readers even if it is only for a short while until their vaporware product emerges.

Rann Xeroxx

Now is not the “right time”, Apple is simply putting NFC chips in so instead of just being late (a negative), it must simply be the “right time”.

Not even suggesting that they are late or its the right time, but I would suggest that you simply do not see the same negativity with Apple stories that you do with other companies. Its just seems to be a fact, and yes, I do use Macs and iPads.

Eamon Walsh

given how far ahead droid powered devices have surged on this one, Apple would be hard pressed to not just include it, but also see to how much they can make it sound like they’re not playing ‘catch up’. Their Asian friends have really stole a march on this one. Besides, the security counsels might come up with something from this list bit.ly/1qvnyrK to highlight more spanners in the wheel.

Eddie

> First, the card payment industry in the U.S. is woefully behind
> other parts of the world. Go to Europe or other overseas regions
> and you’ll find more advanced and more secure payment card
> techniques, such as “chip and PIN.”

Kevin oh Kevin! Why do I have a feeling of déjà vu? Just ask Om! Remember in the 1990s how far behind the U.S. was with GSM cellular phone technology compared to, say, Europe? And also recall how much behind the U.S. was regarding use of SMS for text messaging (compared to Europe). My oh my, its downright amusing how many in Silicon Valley’s mindset generally is that the Valley is the center of the world where all “innovation” takes place on behalf of the remainder of the world (sigh, Copernicus taught us otherwise many moons ago)!

Henry3Dogg

“Note too that NFC and EMV can work hand-in-hand to provide a contactless, more secure payment transaction.”

Any mechanism that prevents the need for the PIN to be entered through equipment controlled by anyone other than cardholder, is a big security improvement.

NFC is part of one solution to that.

Henry 3 Dogg

Stupid title.

The ONLY time for the iPhone 6 to “gain” NFC would be now. Apple aren’t going to retrofit it somewhere down the line.

But whether NFC would be a gain is a matter of opinion. Not unless Apple does a lot more to make it secure than anyone else has.

Anyway, Apple seem far more invested in low power Bluetooth, which would fit better with their existing models (unless the tear down shops have been asleep on the job).

I suspect that someone is starting these rumours to pump the NFC chip shops before they dump them.

But hey, what do I know.

Kevin C. Tofel

Agreed on the title; I had meant to leave the “6” out and forgot. I’ll remove that. Nobody is using low-power Bluetooth for payment processing so I’m lost on that point.

Henry3Dogg

Almost nobody is using NFC for payment from smartphones. The systems exist, but few use them”

The industry seems to be waiting for Apple to set the trend.

I doubt that Apple will choose to kick start a trend that relies on hardware that isn’t in the iPhone 5 / 5s, but is in large numbers of competing devices.

Low power Bluetooth is a valid alternative to NFC and is available in the iPhone 5 and 5s.

So if Apple launch an NFC based payment system, they’ve got zero potential users from day one.

If they launch a Low Power Bluetooth based system then they’ve got 400 million potential users from day one. Or more.

The retailers will need new equipment either way.

Which would you back if you were Apple?

It’s not too hard.

Kevin C. Tofel

“The retailers will need new equipment either way.”

Not exactly. There are hundreds of thousands of pay-to-tap terminals available and in use now, i.e.: the NFC terminal rollout began years ago.

Henry3Dogg

In Europe, yes. But your article seemed more focused on the US.

And even the NFC terminals that there are, were more designed for dumb smartcards rather than smart smartphones.

As I said, I don’t see Apple going NFC without making it considerably more secure, and then the terminals probably need changing anyway.

So why would Apple give Android a leg up by triggering acceptance of flakey NFC for which their own user base is unequiped, when they could do something genuinely better, and start out in pole position?

No, I think you are just following rumours designed to pump the NFC chip makers before Apple moves and the market gives up on NFC.

Kevin C. Tofel

I’m not sure you understand the current state of NFC and tap to pay in the U.S. Did you not see the PayPass locator I listed in the article where I mentioned even in my very rural area there are 20 options within 5 miles of my house? There are tens of thousands of such terminals here (in the U.S.) that work with NFC and other RFID technologies. My clear AMEX card, for example, has an RFID chip in it that works with the terminals and has for about 8 years.

What exactly makes NFC considerably insecure as say the same type of chip used in the EMV cards overseas? Nothing because the concept is the same; the physical implication is slightly different.

I can’t comment on rumors to pump NFC or any other technology / company: Our editorial policy forbids me from investing in any of the stuff I cover.

At the end of the day, we each have an opinion and I respect yours. I simply disagree with it because nobody uses Bluetooth for payment processing so the idea seems very far-fetched to me.

Not impossible, but I don’t see any logical evidence to see why BT LE is a good option now; particularly when it’s been available in phones — including the iPhone since iOS 5 — for a few years now. Sidenote: There’s no Bluetooth Profile for payments like there are for location, health care and exercise. For a BT standard, the BT SIG would be involved. If and when they do, THEN I could see BT used for mobile payments but not before.

Henry3Dogg

@Kevin

In the absence of a reply button on your reply, then this is a reply to my post above.

0) You say “I can’t comment on rumors to pump NFC or any other technology / company: Our editorial policy forbids me from investing in any of the stuff I cover.”

Lets clear the air on this one first.

I wasn’t suggesting that YOU were trying to pump the NFC chip vendors. What I said was “I think you are just following rumours designed to pump the NFC chip makers…”

1) You say “I’m not sure you understand the current state of NFC and tap to pay in the U.S.”

I repeat, I don’t see Apple going NFC without making it considerably more secure, and then the terminals probably need changing anyway.

So the current state of NFC rollout in the U.S. is probably irrelevant.

2) You ask “What exactly makes NFC considerably insecure as say the same type of chip used in the EMV cards overseas? Nothing because the concept is the same; the physical implication is slightly different.”

The bottom line is, NFC for smartphone payment has not taken off in the states or Europe and you, and the articles that you reference, propose that Apple may kickstart it.

There are reasons why it hasn’t taken off.

Remember, when it took off in Europe, electronic fraud was 15 years less advanced than it is now.

I wouldn’t roll out the existing NFC infrastructure for dumb smart cards cards now, and I certainly wouldn’t roll it out for smart devices.

In Europe, people are generally more happy paying small amounts via NFC terminals. It’s widely used for road and bridge tolls or for underground fares.

I wouldn’t use an NCF card for an account that would accept large debits via the current NFC standard. It’s too easy to see ways where your device could end up signing a request that isn’t actually coming from the terminal that you are intending to pay.

We live in a world where we’ve already seen large scale scams with keyboard overlays that were recording PIN keystrokes on terminals that supposedly sent the PIN directly to the card.

NFC always introduced a much larger chance of passing bogus payment requests to a device at a time when the user was expecting a request, than with terminals that directly read the card.

If we’re going to get serious about trusting smartphones for serious transactions, then I would want to see something more secure than the existing NFC standards.

3) “…I don’t see any logical evidence to see why BT LE is a good option now”

Understand, I did not state that BT LE was better, though I believe that it is. To partially reflect your opening comment back to you…

I’m not sure you understand the current state of NFC and BT LE standards.

Nor was I suggesting that NCF couldn’t be improved to to do the job better.

But in either case, to move forward to the level of security that I would like to see, probably involves replacing the existing readers.

And so the $10K question is this

If Apple are the ones that can kickstart this, and why else are we having this discussion now, then why would they chose to do so on NFC, which their existing devices do not support but competitors devices do, rather than on BT LT which there existing devices do support.

Perhaps you could elucidate?

Kevin C. Tofel

Appreciate the thoughts and sorry we ran out Reply threads. ;)

A comment on NFC security: it alone isn’t the authentication; it simply does the “presence” part of a transaction. For me to use Google Wallet with NFC, for example, I have to first use a PIN to unlock my phone. Clearly, that’s an option that not everyone will use. But to unlock the Wallet app, there is a PIN required in app; same as chip and pin techniques in Europe which is prevalent.

If only Apple had something to add the second authentication layer to an NFC payment. Like a secure enclave for fingerprints. ;) Touch ID is something that competing phones don’t have so Apple does have a leg up on Android even though some Android phones support NFC. Some have fingerprint readers as well but most don’t and the ones that do haven’t implemented it well.

I completely disagree with the “terminals probably need to be changed anyway” thought that eliminates NFC from the equation. Mainly because of how many terminals do accept tap-to-pay through both NFC and RFID now. We can debate that one but there’s little point as neither of us likely to change our minds.

As far as Bluetooth, it could work but then all terminals around the world WOULD need to be changed. And that makes little sense. Why go with something with 100% new infrastructure globally? Another thought: Bluetooth is fine to transfer the small bit of data involved here. So too is Wi-Fi. But the N in NFC is the reason it makes more sense. A short range of a centimeter or so is what’s needed here for security and effectiveness: not a wider range of a few feet of dozens of feet. That’s obviously opinion on my part.

Michael Bond

“But whether NFC would be a gain is a matter of opinion. Not unless Apple does a lot more to make it secure than anyone else has.”

What makes NFC less secure than, say, a credit card?

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