iPhone 5 to come with NFC – Apple chases m-payments

2 Nov 2010

Apple’s forthcoming iPhone 5 – due out in spring 2011 – will come with a built-in near field communications (NFC) chip that will pave the way for a myriad of potential applications, such as mobile payments on the go. Apple may also be expanding its retail expertise to new markets.

NFC is a short-range, high-frequency, wireless communications technology that enables the exchange of data between devices over some 10 centimetres (four inches) apart. The technology could enable the growth in the market for contactless credit cards and other forms of identification and transaction.

The technology is already in use in two towns in Ireland – Dundalk and Tuam – as well as across 32 Insomnia cafes around Ireland, not to mention various Londis, Munchies and Eddie Rockets outlets via former Alphyra CEO John Nagle’s firm, Zapa Technology.

In recent days, it emerged that Apple may be ditching the white iPhone 4, which due to its colour is affecting camera quality and may instead focus exclusively on its next smartphone, the iPhone 5, which is expected to arrive in spring 2011.

NFC built into the iPhone could open the door to a whole new paradigm in mobile commerce, allowing users to carry cash and credit inside e-wallet applications.

By simply waving the device beside a terminal with NFC a user can authorise a payment. The technology could be invaluable to the new wave of contactless credit and debit cards that dispel with using PIN numbers for micro payments under US$15. All of this is important in the move towards cashless economies.

But not only payments, according to a report on Cult of Mac, Apple also intends to use the authentication potential of NFC in the iPhone 5 as a way turning any Apple Mac into your own Apple Mac with a simple wave of the device by a reader by authenticating with bookmarks, passwords, etc.

This brings an exciting new dimension to the age of ubiquitous computing.

Retail expertise

It would seem Apple is focusing on a whole new business direction that would see retailers install Apple Mac computers in their stores and enable a new form of cashless payments.

In other words, the success of the Apple Stores – 310 worldwide and counting – and the retail experience means Apple has amassed a lot of know-how and expertise that could revolutionise the buying experience for consumers.

Each Apple store is refined to suit its location and surroundings and are the epitome of style with their wood tables, stone flooring and surgical-grade steel walls. The company has won a number of architectural awards for its efforts.

But it is the way the business is run within these stores, how payments are processed and how it all feeds into the back-end supply chain management systems that Apple holds real potential and this is why I think marrying the Mac with NFC is not only an exciting statement for consumers, but an exciting new business direction for Apple. It could export its retail expertise to any number of retailers, from shoe shops and tailors to travel agents and home décor.

Apple in 2006 replaced the dedicated point of sale station in its stores with handheld EasyPay systems. Only flagship stores in principle cities have a dedicated point of sale while other stores have a point of sale behind the Genius bar to handle transactions that cannot be processed by EasyPay.

The company recently augmented the EasyPay system to allow transactions to be processed on iPod Touch devices.

By opening up the EasyPay model to be handled on any iPhone 5 device in any store to enable contactless debit and credit card payments, Apple could accomplish potentially more than Facebook, which is still working hard to bring its Social Graph from the virtual to the physical world.

If this is Apple’s strategy, then it’s pure Genius!

Below: The Apple Store at Carrousel du Louvre in Paris

Apple's flagship store in Paris

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years