On March 2nd, Steve Jobs presented the iPad 2 at San Francisco ending with rumors about its possible features. One of the most significant omissions was the lack of Near Field communication (NFC) technology. What does this mean for the future of this new form of payment tech?

   On March 2nd, Steve Jobs presented the iPad 2 at San Francisco ending with rumors about its possible features. One of the most significant omissions was the lack of Near Field communication (NFC) technology. What does this mean for the future of this new form of payment tech?

   In Silicon Valley, NFC is becoming an increasingly hot topic. Recently, Apple let European Mobile Network Operators (MNOs) know that the iPhone 5 will not include an NFC payment system (Source: The independent : http://www.independent.co.uk/life-style/gadgets-and-tech/news/apple-rejects-wave-and-pay-for-new-iphone-2241090.html). Apple justifies its strategy by arguing that there is no "standard across the industry." In other words, Apple is telling the European phone carriers that its version of NFC will not be ready until 2012 and will exclude other forms of the tech currently in use.

   While it clearly appears that in the NFC payments sector, the standards issue continues to divide NFC participants. But this is not the only issue that Apple will face. A few months ago, Apple could not resist carrier pressure and folded its plans to integrate directly the SIM card into the hardware in partnership with Gemalto. Once again, it could be too early for Apple to be aggressive in this field because of the huge numbers of stakeholders involved. Thus, NFC payment could be part of Apple's strategy that may not be aligned with that of mobile carriers.

   One might assume that Apple is going to include NFC into the next version of its handsets or the MacBook. Before going into details about Apple’s potential NFC strategy, we should keep in mind that this technology can be used for a great deal more than making payments, even if payments have the greatest revenue-generating potential. We can roughly categorize NFC technology in 3 types of interactions: peer-to-peer communications, reader/writer mode and payment. In the light of this classification, here are some assumptions about potential usages:

  • Peer-to-peer communications: The new iPad/iPhone/MacBook could potentially serve as a data drive, store Mac owner settings,  assist with pairing/synchronizing the handset with other Apple products meaning that other Mac computers will also need to be upgraded before this can happen (via external or internal NFC hardware). NFC could turn the next generation of Apple's products into new components for Apple TV, to ensure for example the seamless transition between screens wile watching a sports game. We should note that Researchers from Stanford University's MobiSocial lab demonstrated the first Android NFC peer-to-peer applications last month, and showed how NFC could be used to interact with TVs and worked on a phone-to-phone file transfer service and a 'collaborative whiteboard." (http://www.youtube.com/user/handdog).
  • Reader/writer mode: Typically, this form would be an iPad as a point of sale terminal, for example, or for entering a dinner order at a restaurant. Some companies have already worked on this feature, and dedicated devices and hardware can be plugged into Apple’s tablet in order to NFCize it. Another potential application uses Apple's handsets as electronic badges or tickets (for example, for a concert).

   With these usages, we clearly see that there are a lot of new opportunities for NFC, not only payments. Therefore, in light of these recent announcements, it is unclear if Apple's plan is to create a new NFC product through which buyers and sellers must conduct business. In a more general way, will Apple allow competing systems to be install?

 

By Thibaut Loilier