Apple Passes on NFC in iPhone 5

by Mercator Advisory Group 0

Apple Wednesday revealed its new iPhone 5, but many industry observers and technology geeks mentioned in blogs and social media outlets leading to the announcement that we all pretty much knew what was coming based on numerous product leaks. And now we know for sure Near Field Communication is not in Apple’s immediate plans.

The iPhone 5 does not contain an NFC chip and how that affects mobile payments’ ability to gain more mainstream use will be answered in the coming months. Apple’s new iOS still will feature Passbook, which is designed to store closed-loop payment cards, and items such as movie tickets, boarding passes, and loyalty cards. With Passbook limited to just closed-loop cards such as a Starbucks gift card, perhaps that was a sign Apple had no intention to include an NFC chip that would’ve opened the door for users to pay at the point of sale with open-loop prepaid cards, credit, and debit.

Apple’s decision not to include NFC and create some kind of iTunes mobile wallet probably comes as a relief to Google and Isis, which have both stumbled out of the gate with their NFC mobile-wallet concepts.

Google Wallet dealt with security issues and recently dropped the prepaid account attached to the mobile application. Google has since addressed the security issues, but Wallet acceptance by merchants and widespread consumer use continues to be an ongoing issue.

Isis has yet to start pilots in Austin and Salt Lake City. The joint venture between AT&T, T-Mobile and Verizon announced last year a summer 2012 test was in the works, but autumn starts in nine days. Isis continues to insist a summer pilot is in the works.

With Apple passing on NFC, Samsung now is the undisputed champion in the ring in terms of contactless-enabled devices. Samsung sold some 20 million NFC-enabled Galaxy S III smartphones in the first 100 days since the product debuted in May 29.

More NFC-enabled phones are on the way as Motorola Mobility recently announced three new smartphones will have the chip. Keep in mind Google recently purchased the company.

The iPhone 5’s lack of NFC might represent a warning sign to the industry mobile payments are still too fragmented for Apple’s liking. We’ve all seen the patents the technology giant filed in the past. But many industry experts, including Mercator, believe Apple only will take the NFC plunge when the technology proves itself on a large scale. The company then will apply its twist on NFC-enabled payments such as the aforementioned iTunes mobile wallet.

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