Next-gen iPhone, iPad expected to get Near Field Communications

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iPhone users may soon be able to pay for purchases by merely getting within range of a reader. A new rumor prediction from Envisioneering Group director Richard Doherty indicates such technology is coming in the next-generation version of the iPhone and the next-generation iPad, both of which are expected to debut this year.

The wireless technology is NFC, or Near Field Communication, and it may already be built into things you carry on a daily basis. Some credit cards come with an RFID chip that can be read at places like convenience stores and gas stations, which often have an NFC reader located just above the normal credit card reader. You can tap or wave your card near the reader and have your purchase amount deducted without having to swipe.

That's largely the extent of the NFC exposure we get here in the US, though other countries (particularly Japan) have been much more progressive in rolling out devices and phones with NFC built-in. If Apple were to implement NFC in the iPhone, it would likely work in the same way—your credit card information would be stored somewhere the phone can access it, and when you wave your phone near a reader (say a vending machine, or the checkout line), your purchase would be deducted instantly.

In addition to offering a handy way to pay for things, NFC in the iPhone could also give Apple an opportunity to offer even more targeted ads. As another analyst—Crone Consulting head Richard Crone—told Bloomberg, Apple could personalize its iAds to specific stores or products that Apple knows the customer already buys. Why does this matter? Ad rates (that is, those paid by the marketing companies) could skyrocket once they're more aware of the products that each customer is into.

Doherty added that he believes Apple has already created a payment terminal prototype for small businesses that would be able to scan iPhones and iPads with NFC built-in. He says Apple is either heavily subsidizing the terminals or giving them away for free in order to get the tech off the ground.

Although this latest prediction comes courtesy of the not-always-reliable analyst community, the rumor that Apple has been working on incorporating NFC into the iPhone has been around for more than a year. For one, Apple has applied for a number of patents that involve NFC technology, though patents aren't always the best indicator of what will actually make it to market. However, Apple also hired an NFC expert as product manager for mobile commerce in August of last year, giving the speculation a bit more substance.

As a result, we would hardly be surprised to see NFC surface in an iOS device sometime in the future, though whether it'll come to both the iPhone and the iPad remains to be seen.

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Will Apple, Google Lead Mobile Payment Revolution?

By adding NFC mobile payment support to the iPhone and iPad, Apple -- along with Google -- may provide the spark needed to ignite mainstream use of mobile payments.

Richard Doherty, director of consulting firm Envisioneering Group, believes that the next versions of the iPhone and iPad will include support for near-field communications (NFC). Doherty, citing Apple engineers who are working on the designs, says NFC will be in Apple products released this year.

NFC mobile payments are made by adding a small short-range wireless radio to cell phones that can be scanned by a retailer at the point of sale. Once scanned, the chip tells the phone to debit money from a checking or credit card account paired with the device and send it to the retailer.

Apple has also created a prototype retail NFC scanner, which could be used by small business (think Main Street) to accept mobile payments. Apple may even subsidize the mobile payment device in order to help boost adoption by retailers.

This information from Doherty follows Google's announcement from December 2010 that its own Android smartphone platform will also support NFC moving forward (Android 2.3 Gingerbread and up). With Apple and Google backing NFC, 2011 could finally be the year when mobile payments start to expand beyond limited trials.

In order to make payments via NFC, an entire ecosystem of players must cooperate. That includes network operators, handset makers, banks, credit card companies, application developers, and so on. (We'd be kidding ourselves to think that they don't all want a piece of the mobile payment pie.)

This type of effort is already partially underway in the U.S. through a joint venture called Isis. Network operators AT&T, T-Mobile and Verizon Wireless are backing Isis, as are Discover Financial Services and Barclaycard U.S. (MasterCard and Visa, the two biggest credit card issuers in the U.S., are not backing Isis, however.) Assuming Doherty's sources are right, adding Apple to the mix could be the catalyst to kick the NFC mobile payment ecosystem into high gear.

Both Apple's iPhone and Google's Android platforms are extremely popular sellers in the U.S. Apple sold 16.24 million iPhones in its most recent fiscal quarter, and Google says it is activating 300,000 new Android handsets per day. Simply getting the tech into the hands of mainstream smartphone users is a huge hurdle to overcome, but Apple and Google have the mass-market appeal to make it happen.

The bigger question is, will the other pieces of the puzzle fall into place as easily? Probably not. Visa and MasterCard are working on their own mobile payment systems, and other entities, such as PayPal, are exploring other avenues as well. Without broad cooperation between the multitude of players, NFC isn't going to get anywhere fast. Can Apple and Google bring them all to the table and get them to move forward? It's possible.

Information Week

 

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Near Field Communication to aid Apple in biz world domination?

The rumor mill again has picked up again on Apple (AAPL) introducing Near Field Communication technology.

NFC could transform a smartphone into an electronic wallet or passkey. But it also has the possibility of transforming Apple into a bigger force in business.

By waving an NFC-equipped iPhone at an NFC Mac, for example, the Mac will load apps, settings and data. But an NFC device also could be in effect a credit card substitute.

NFC is in wide use in Asia. It appears it is on its way to the USA.

Olga Kharif at Bloomberg quotes Richard Doherty, director of consulting firm Envisioneering Group, as saying the next version of iPhone for AT&T (T) and the iPad 2 will have NFC capabilities: Both products are likely to be introduced this year, he said, citing engineers who are working on hardware for the Apple project.

Visa (V) and MasterCard (MA), eBay (EBAY) and PayPal watch your backs. Richard Crone, who leads financial industry adviser Crone Consulting LLC, said the goal with NFC would be for Apple to get a piece of the $6.2 trillion Americans spend each year on goods and services.

Khraif reported Apple now pays credit-card processing fees on every purchase from iTunes. By encouraging consumers to use cheaper methods -- such as tapping their bank accounts directly, which is how many purchases are made via PayPal -- Apple could cut its own costs and those of retailers selling Apple products.

Apple declined comment on NFC. But the company has hired NFC talent and has NFC patents.

MG Siegler in TechCrunch said Apple has no choice but to adopt NFC: Google (GOOG) has introduced NFC into its Nexus S Android device. So NFC for Apple "has gone from a no-brainer to a must-do."

Seigler said if Apple adopts NFC into its iTunes payment system: "It could change everything. It could transform Apple from the biggest technology company in the world, to the biggest company in the world, period. By far."

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iPhone 5 and iPad 2 Could Make Credit Cards Obsolete

Imagine paying for your groceries by tapping a retailer's terminal with your iPhone. Such a move could become commonplace if a new report is accurate in predicting that Apple will include wireless e-payments in the upcoming iPhone 5 and the iPad 2.

According to Bloomberg News, the new iterations of those popular mobile Relevant Products/Services devices will include near-field communication (NFC) technology, which allows financial-transaction data Relevant Products/Services to be transmitted up to four inches. Such e-wallets could become a replacement not only for the plastic credit card, but for the credit-card financial system as well.

Credit-Card Alternative?

While Apple and other manufacturers could utilize the credit-card system in NFC e-wallets, they could also go around them and, essentially, create an alternative transaction system. For instance, NFC e-wallets could work directly with gift-card balances on iTunes or bank checking accounts. Apple pays credit-card processing fees on every iTunes purchase, so the company has an incentive to forge a new system from pieces already in place.

There are also reports that Apple is retuning iTunes to support NFC transactions as early as the middle of this year, including new loyalty programs. Loyalty points might be awarded, for instance, for making a non-credit-card e-wallet purchase.

Credit-card companies such as MasterCard say they are embracing NFC as a way to enhance and utilize their finely honed and extensive system. E-wallet purchases could also stimulate an entirely new direction for many kinds of mobile ads, especially those that are location-based. For instance, a stroll to the corner could call up an ad on your smartphone for a sale in a nearby store, with a discount for purchases made via e-wallet.

'Just Around the Corner'

The reports also indicate that Apple will provide payment terminals free or at a deep discount for small businesses to create a sizable installed base. One question is whether such a terminal could be used by other, non-Apple mobile devices. If so, Apple is laying the groundwork for its competitors. If not, retailers are orienting at least part of their operations entirely to Apple's needs.

If Apple implements the technology on its iPhone and iPad, competitors are likely to quickly follow suit. Google said last fall that newer Android devices will have NFC support.

Avi Greengart, an analyst with Current Analysis, noted that NFC technology "holds promise" for personal identification, such as ID at a building security Relevant Products/Services check-in, in addition to e-commerce, but this promise has "always been just around the corner." He added that "Nokia has tried to push NFC for at least a decade."

"It's a chicken-and-egg problem," he said, "with the merchant side being the biggest challenge." If the merchant side is solved, he said, it's not that expensive to include in devices, and it could become popular as the quickest way to make a transaction.

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