We’ve heard rumors that Apple is working on a near-field communication (NFC) payment system for the iPhone before, but new details have emerged that may allow users to pay for goods and services with their iTunes account.
Bloomberg is reporting that Apple’s plans for NFC (near-field communication) on iOS devices is finally taking shape, allowing for contactless payments from a distance of up to four inches. According to Richard Doherty, the technology is “due to be embedded in the next iteration of the iPhone for AT&T Inc. and the iPad 2.” Doherty is the director of consulting firm Envisioneering Group, who cites recent reports from “engineers who are working on hardware for the Apple project.”
“Apple’s service may be able to tap into user information already on file, including credit-card numbers, iTunes gift-card balance and bank data, said Richard Crone, who leads financial industry adviser Crone Consulting LLC in San Carlos, California,” the Bloomberg report reveals. “That could make it an alternative to programs offered by such companies as Visa Inc., MasterCard Inc. and EBay Inc.’s PayPal, said Taylor Hamilton, an analyst at consultant IBISWorld Inc.”
Needless to say, the impetus behind Apple’s move to mobile payments is to get a slice of that very big pie -- Americans currently spend $6.2 trillion per year, and the payments that Apple collects via iTunes are subject to merchant and credit card processing fees. “By encouraging consumers to use cheaper methods -- such as tapping their bank accounts directly, which is how many purchases are made via PayPal -- Apple could cut its own costs and those of retailers selling Apple products,” the report says.
Apple certainly isn’t the only player in the smartphone market interested in NFC -- Bloomberg’s report cites the Android-powered Samsung Nexus S as one such device that is already capable of reading NFC tags, but Doherty notes, “Apple could be the game-changer.”
“Apple has created a prototype of a payment terminal that small businesses, such as hairdressers and mom-and-pop stores, could use to scan NFC-enabled iPhones and iPads,” Doherty revealed to Bloomberg. “The company is considering heavily subsidizing the terminal, or even giving it away to retailers, to encourage fast, nationwide adoption of NFC technology and rev up sales of NFC-enabled iPhones and iPads.”
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