Apple NFC payments were widely expected to take a major step forward with the anticipated launch of the iPhone 5, but reports suggested Apple would instead delay adding Near Field Communication technology to its smartphone. Such a decision could have significant implications for an emerging mobile payments industry looking to Apple and its enormous customer base to help move NFC into the mainstream.
Several factors could explain Apple’s hesitation. The company had yet to establish how it would monetize NFC payments, while questions remained about industry standards and control of the technology. At the same time, reports suggested Apple was considering a broader payments strategy connected to its iTunes ecosystem. Delaying NFC could therefore give the company additional time to determine both the technology and business model behind its eventual entry into contactless payments.
If this news is indeed true, it leaves open an opportunity for the Google Android team. While Google does not make handsets or control that supply chain, it has made NFC a major initiative. If Android handset makers are adding this chipset and Apple is not, it could give the Android ecosystem a head start. As the world’s largest advertising platform, Google is really interested in those revenues, and not the payments-based ones, for the mobile channel. If Google can convince handset manufacturers of Android phones, then we’ll see that capability first in the Google ecosystem. Based on the nearly unanimous set of NFC announcements for new Android phones at Mobile World Congress, that much seems assured.
Sources at several of the largest mobile operators in the UK revealed Apple had disclosed in meetings that it would not be including Near Field Communication (NFC) technology – which enables payment for products with a wave of your phone on a reader – in the latest version of the iPhone, be it the iPhone 4GS or the iPhone 5.
One source close to the discussions said: “The new iPhone will not have NFC, Apple told the operators it was concerned by the lack of a clear standard across the industry.” Yet Apple is understood to be working on its own NFC proposition, which would link payments through iTunes. It hopes to introduce the technology in a handset likely to be released next year.
Apple NFC payments may have been delayed, but Apple’s decision could create an important competitive opening for the Android ecosystem. Google had already made NFC a priority, and widespread adoption among Android handset manufacturers could give the platform an early advantage in contactless payments and other NFC applications.
The longer-term question was whether that head start would matter once Apple entered the market. With its large installed customer base and control over both hardware and software, Apple could still become a powerful force in NFC payments—particularly if it developed a payment proposition closely integrated with its existing ecosystem.