The iPhone 5 NFC decision represented a significant moment for the emerging mobile payments market. Apple chose not to include Near Field Communication technology in the device, instead focusing on Passbook as a way for consumers to store closed-loop payment cards, loyalty cards, boarding passes, tickets, and other digital credentials. Apple maintained that Passbook addressed the immediate needs of its customers without requiring NFC.
The decision had implications far beyond the iPhone itself. Given Apple’s enormous smartphone customer base, NFC support could have accelerated consumer awareness, encouraged developers to create new applications, and given merchants more incentive to invest in NFC infrastructure. Without Apple pushing the technology forward, competitors such as Google Wallet and Isis had an opportunity to establish their own NFC-enabled mobile payment solutions while other smartphone manufacturers continued adding NFC capabilities to their devices.
Apple senior vice president Phil Schiller told All Things Digital in an interview the company decided against including a Near Field Communication chip inside the iPhone 5 because it believes the technology does solve any current problem.
“Passbook does the kinds of things customers need today.”
Passbook is designed to store closed-loop payments cards such as the Starbucks card, and items such as movie tickets, boarding passes and loyalty cards. Indeed, there are everyday use cases where something like Passbook would come in handy as Schiller suggests. Still, Apple did no favors for payments companies that were counting on the technology giant to include NFC in the most popular phone on the planet.
An article from GigaOm suggests this very thing, saying Apple could’ve been the catalyst for NFC and mobile payments had it included the technology.
Equipping the most popular phone with NFC would have a been huge education moment for consumers and a big validation for NFC. Developers could also get on board and create some really interesting apps with Apple’s encouragement.
Of course, there is more to NFC than just payments. If the iPhone 5 had included NFC, would companies have shifted away from QR codes in advertisements to using smart posters? One of NFC’s appeals is a scenario where a smartphone user scans an advertisement in a subway station and then travels across town to use the discount that was beamed to their phone. Retailers certainly would’ve done everything possible to cash in on iPhone 5 users.
But keep in mind smartphones such as the NFC-enable Galaxy S III are selling well and have reviewed well with technology buffs and the media in general. With Apple still sitting on the sidelines, Google Wallet and Isis have an opportunity to drive the conversation about NFC-enabled mobile payments.
The iPhone 5 NFC decision demonstrated the influence Apple could exert over the development of mobile payments simply through the technologies it chose to support. Including NFC might have provided a major catalyst for contactless payments, smart advertising, digital offers, and other applications that relied on communication between smartphones and NFC-enabled devices.
Instead, Apple placed its emphasis on Passbook and left NFC development largely to competitors. That gave Android-based devices and mobile wallets an opportunity to demonstrate whether NFC could deliver enough consumer and merchant value to become an important component of the evolving mobile payments ecosystem.
Click here to read more from All Things Digital and here to read GigaOm’s article.
