Imagine paying for your groceries by tapping a retailer’s terminal with your iPhone. Such a move could become commonplace if a new report is accurate in predicting that Apple will include wireless e-payments in the upcoming iPhone 5 and the iPad 2.
According to Bloomberg News, the new iterations of those popular mobile devices will include near-field communication (NFC) technology, which allows financial-transaction data to be transmitted up to four inches. Such e-wallets could become a replacement not only for the plastic credit card, but for the credit-card financial system as well.
Credit-Card Alternative?
While Apple and other manufacturers could utilize the credit-card system in NFC e-wallets, they could also go around them and, essentially, create an alternative transaction system. For instance, NFC e-wallets could work directly with gift-card balances on iTunes or bank checking accounts. Apple pays credit-card processing fees on every iTunes purchase, so the company has an incentive to forge a new system from pieces already in place.
There are also reports that Apple is retuning iTunes to support NFC transactions as early as the middle of this year, including new loyalty programs. Loyalty points might be awarded, for instance, for making a non-credit-card e-wallet purchase.
Credit-card companies such as MasterCard say they are embracing NFC as a way to enhance and utilize their finely honed and extensive system. E-wallet purchases could also stimulate an entirely new direction for many kinds of mobile ads, especially those that are location-based. For instance, a stroll to the corner could call up an ad on your smartphone for a sale in a nearby store, with a discount for purchases made via e-wallet.
‘Just Around the Corner’
The reports also indicate that Apple will provide payment terminals free or at a deep discount for small businesses to create a sizable installed base. One question is whether such…