Blogs
Michael Grothaus
16:37, 12 May 2014
Apple's apparently kitting out its upcoming iPhone 6 with NFC. Michael looks at the pros, cons and possibilities
New rumors have surfaced today saying the iPhone 6 will support an NFC chipset and that Apple has also inked a deal with China UnionPay to integrate the bank’s mobile payment services into iOS’s Passbook.
Normally these rumors would go in one ear and out the other, but the thing is earlier this year KGI Securities analyst Ming-Chi Kuo said the iPhone 6 will feature NFC. Kuo is one of the only analysts that matter. While most are just paid opinion monkeys talking out of their asses so they can look like knowledge banks for their clients, Kuo has a virtually 100% accurate track record when it comes to Apple predictions. So will Apple include NFC in the iPhone 6?
Here, I’ll look at the history of Apple’s relationships with the technology, what it is, what its competing technology is, and finally what NFC would mean for Apple, its users, and the industry as a whole.
What Is NFC?
NFC stands for Near Field Communication and, at its most basic, it is a standardized radio communication technology (that actually dates from the 1940s) that lets two devices exchange data with each other once they are in range of one another – usually a few inches or less. The technology in its current form is most often seen in Android phones and some Windows Phones.
While NFC can theoretically be used to transfer any type of data between two devices, its most widespread consumer use to date is as a mobile payment system. A universal mobile payment system is seen as something of a holy grail among banking and technology companies as it could disrupt the physical wallets and credit cards we all still very much rely on.
Of course, for any mobile payment system to work, it needs to reach mass adoption (like the credit card) or else its not worth retailers’ time and the costs involved of installing NFC payment stations in every brick and mortar shop across the world. The problem is the mobile payment market is potentially so big, every tech company and bank wants to be the de facto leader so its lead to proprietary competing services, like Google Wallet from Google and Isis, which is backed by Verizon, AT&T, and T-Mobile in the US.
Apple’s Relationship with NFC So Far
Apple usually doesn’t rush into new technologies the way other companies do. They weren’t the first with the MP3 player or the smartphone, instead waiting until they could come up with their own solution that was actually better than existing ones. This has been Apple’s stance with NFC, too. Matter of fact, in 2012 Apple’s Phil Schiller said that despite its buzz, NFC was ”not the solution to any current problem.”
Indeed, because of the competing technologies from Google, Verizon, and others, NFC seems to actually be eating itself alive as each company’s solution locks other users out, which leads to less adoption from retailers. This is one of the problems Apple saw with NFC.
Still, that hasn’t stopped Apple from filing for patents relating to NFC technologies.
iBeacons vs NFC
Last June Apple announced iBeacons at WWDC. iBeacons is a Core Location API in iOS 7 that allows any iOS device with a Bluetooth 4.0 chip (also know as Bluetooth Low Energy, or BLE) to know where it is in relation to other BLE devices. iBeacons allows devices to talk to each other, relating their location in real time without the need for Wi-Fi or GPS.
iBeacons has myriad uses. For example, it could be used to tell iPhones where they are in relation to fixed beacons, like when a customer walks into a Gap, iBeacons could alert that customer to in-store specials. But iBeacons also has the potential to be used as a mobile payment solution and one which could potentially be a lot cheaper to implement as stores could buy ready-made iBeacon receivers for as little as $5 each per register.
Best of all, since iBeacons only needs a device with Bluetooth 4.0 to work, an Apple mobile payment solution using the technology as its backbone would be compatible with all iPhones and iPads going back to the iPhone 4 and the iPad 2.
What an NFC iPhone Would Mean for Everyone
So if Apple has iBeacons, why might it be returning to NFC?
The fact of the matter is two years is a long time in the tech world and the needs of users have changed since 2012. NFC technology has also come along leaps and bounds since then, too. In 2012 NFC was still a relatively power-hungry beast that would drain a phone’s battery more quickly than it should. But as NFC chips have gotten smaller and less power hungry, they’ve become more efficient. Also in 2012 Apple’s Touch ID didn’t exist, meaning any NFC solution would require the user to enter a passcode onscreen or even sign the screen with their finger. With those requirements, how was the smartphone as a mobile payment solution any better than a credit card?
It wasn’t.
But Touch ID has changed all that. If Apple added NFC now iPhone users would hardly notice a battery hit and, more importantly, paying via Apple’s NFC solution could actually be leagues faster than a standard chip and pin card as you’d just need to tap your phone to an NFC terminal while resting your finger on the Touch ID.
It’s the merging of the two technologies and the added security Touch ID brings to mobile payments that is why 2014 could be the year Apple decides NFC is ready for the masses; and if it does expect the mobile payment industry to be transformed overnight as large retailers and small mom and pop shops race to adapt to the new technology.
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