Patent Application Fuels Apple Pay2 Rumors

by Tim Sloane 0

After Apple filed a patent entitled “MANAGEMENT OF NEARFIELD COMMUNICATIONS USING LOW POWER MODES OF AN ELECTRONIC DEVICE” the rumorsthat this defined Apple Pay II began to fly, as in article

:

“Lessthan half a year into Apple Pay’s lifespan, the company has already filed apatent for Apple Pay 2.0 with the United States Patent and Trademark Office.

Thenew version will expand Apple Pay’s list of functions to include couponredemption, loyalty, and ticketing functionality, but the most significantdevelopment will be the addition of a low-power enabled NFC feature forpayments.”

In Mercator’s glance at the patent we fail to see where anynew loyalty specific or coupon specific capabilities have been specified. The patent appears to be focused on twodifferent but related aspects of Apple Pay.

The first identifies how the NFC/Secure Element chip set canbe expanded to securely interoperate with the traditional hardware and softwarethat resides in the smartphone. Thesecond aspect of the patent identifies a technique for managing smartphonepower such that other functions will be turned off in order to conserve batterypower for the NFC-based services.

This specification is needed because Apple Pay does not operateentirely from the parasitic power generated from the RF field radiated out fromthe POS (as done for plastic cards that are NFC enabled and as implemented inmost NFC/Secure Element [SE] chip sets such as Broadcom’s). To enable Touch ID Apple Pay must integratethe payment process with processes that operate outside the chipset in theiPhone itself.

Based on this Mercator very brief review of the patent, therest of the PYMNTS article is mostly accurate although it blurs the linebetween the NFC implemented within a POS device that radiates RF power versusthe NFC device in a payment instrument that is entirely passive until awakenedby the RF energy:

“Thereason for the Lower NFC Power Mode feature is meant to help users who dependon Apple Pay gain access to payment information even when their iOS devicesdrop below a certain battery level. Currently, in an effort to preserve batterypower, some features of Apple Pay shut off once battery life drops below acertain point. Existing apps that would run in the background of the paymentfeature (and would drain battery life in other ways) would be turned off whilethe low power NFC mode runs as a replacement for the NFC-less way to conservebattery life. With this new feature, NFC functionality can be restored throughuser requests, as well as general management of the NFC beacon that enablespayments, according to Patently Apple‘s analysis of the company’s patentapplication.

Userauthentication would likely still be required for the new low-power mode atleast initially, according to the patent, so that there is enough “appropriate”security and accessibility to the user and to the merchant. At first glance,this appears to be a way of making NFC more efficient in the face ofcompetition from other forms of payment communication like Beacon technology incertain stores, as well as non-NFC payment methods like the rumored GooglePlaso that uses consumer initials for confirmation, or Samsung Pay that usesLoopPay technology that runs similar to card swiping at POS terminals.”

Mercator will have more to say on this patent as it becomesrelevant associated with both the Apple device used as a POS and as a paymentinstrument.

Overview by Tim Sloane, VP Payments Innovation for Mercator Advisory Group

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