The Apple event rumors are coalescing into a more coherent picture that indicate Apple planning to put Near Field Communication chips inside next-generation iPhones for a mobile wallet effort. The latest rumor is from Bloomberg, which quotes a source saying that the hardware giant is working with MasterCard, Visa and American Express on a payments platform around the NFC chip reported to be in the phone.
The goal, according to Bloomberg is to ready a mobile payments platform built around NFC in the upcoming iPhone to launch at the Sept. 9 Apple event. While, every year, we seemingly hear of NFC launching in the anticipated iPhone, my colleague Kevin Tofel has written about how the looming transition to higher security payments that require using a password and chip inside cards in the U.S., and the utility of NFC’s tap-to-pair in a world of increasing connected devices, mean that Apple may finally be ready to take on NFC. From his story:
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. …
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?
As a radio technology, NFC allows two objects that are close to each other to securely exchange information. It’s a common radio used in MasterCard’s PayPass and in the fobs employees use to get into office buildings. Currently, select Android phones use NFC for the Google Wallet and carriers’ Isis payments effort. Yes, so far, none of these or other mobile payments efforts have taken off, in part because the mobile ecosystem is fragment and because everyone involved wants a piece of the revenue from processing mobile payments.
The payments industry relies on merchants to implement the proper equipment for accepting credit cards or NFC-radios, while banks have to work with the card companies to issue cards with the appropriate technology. They also have to handle the complex fraud-detection and guarantees associated with credit cards. For this, they and the payments processors like Mastercard and Visa charge a fee to merchants.
But with mobile payments, new players entered this established regime in the form of the carriers and the big mobile OS providers, Google and Apple. And each of the parties involved want their own cut of the revenue. This has meant that we have lots of options, but nothing universal, so many merchants aren’t inspired to upgrade their payment acceptance systems to support mobile payments.
Apple deploying NFC could help create the standard that the industry needs to get merchants to deploy more NFC terminals. Since many merchants are upgrading their current card infrastructure ahead of the Oct. 2015 deadline to accept more secure password and chip technology, the payments processors and Apple may realize that a tiny nudge could set NFC to become the de facto mobile payments standard.
After over a decade, it may be now or never to get a good mobile payments standard set.