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Thursday, 31 July 2014 17:19

Is Apple finally joining the NFC camp?

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Speculation is increasing that the iPhone 6 will include NFC capability along with a payment facility.

There was an expectation in some quarters that the iPhone 4 would include NFC, but it didn't.

The same happened with the iPhone 5, though there were some naysayers ahead of the launch.

So is it going to be a case of third time lucky? There's fresh speculation that the iPhone 6 will include NFC, and that Apple is talking to or even already working with Visa about a payments capability.

Various reasons have been put forward as an explanation why Apple didn't include NFC in previous iPhones. One is that NFC POS terminals weren't sufficiently widely deployed to make this form of payment a must-have for iPhone owners, and Apple seems to have a distinct leaning towards Bluetooth for establishing communication between devices (eg, the Handoff feature in OS X Yosemite and iOS 8, and in iOS 7's AirDrop feature for transferring files).

The various pieces of Apple's NFC payments puzzle are gradually coming together.

The A7 processor used in the iPhone 5C includes the Secure Enclave coprocessor, which among other things handles the Touch ID fingerprint system. Apart from unlocking the device, Touch ID can already be used to approve purchases from the iTunes Store, the App Store and the iBooks Store in place of entering the Apple ID's password.

It's not a huge leap to imagine something similar as a way of approving credit or debit card transactions that exceed the 'tap and go' limit.

Page 2: What Visa is up to.


There are also reports that Apple is talking to Visa, perhaps with a view to using the latter's host card emulation (HCE) specification, which provides for cloud-based Visa accounts with a system of digital tokens replacing physical cards.

Such tokens could be stored in the Secure Enclave for increased security.

HCE is already used in CUA's redi2pay Android app for making contactless payments from Visa debit card accounts. This app requires internet access to complete a transaction.

Apple has reportedly agreed to become involved in China UnionPay's plans to offer an iPhone app that works with its Quick Pass contactless payments service.

This app will supposedly work with Passbook, the iOS application that Apple says "keeps things like airline boarding passes, movie tickets, and gift cards all in one place, letting you scan your iPhone or iPod touch to check in for a flight, get into a movie, redeem a coupon, and more."

There is a suggestion that NFC support in the iPhone 6 (or whatever it is actually called) is part of the deal between Apple and UnionPay.

French site Nowhereelse recently published 'spy photos' of what were said to be an iPhone 6 circuit board, reporting that the source said the motherboard includes an NFC chip.

Various companies have produced NFC-equipped cases and wallet apps for the iPhone. One example is the Commonwealth Bank's Kaching app that optionally worked with the iCarte NFC case.

And last year Coles began a trial of its Pay Tag, which is essentially a MasterCard in the form of a sticker that can be attached to a mobile phone to make contactless purchases.

Page 3: Apple to provide payment service?


There are also suggestions that Apple will offer a complete payment service, routing transactions through the card accounts its customers have already lodged with the iTunes Store, App Store and iBooks Store. Apple is thought to have hundreds of millions of credit cards on file.

What proponents of this theory don't explain is how this would work from a retailer's point of view. It's relatively easy to build another payment method into an online store or mobile app (eg, an app for ordering and paying for coffee without waiting in line), but how would it work at a store checkout?

It's easy enough if all the phone does is emulate a card, but then where's the advantage for the customer? He or she would be served just as well by a Visa-style token stored in the phone, with transactions being applied directly to their debit or credit card account.

POS systems are designed to initiate card transactions, with the retailer deciding who it uses to process the payments. The idea of a customer effectively saying "no, route this payment through Apple" doesn't seem to make much sense from the retailer's perspective.

After all, PayPal launched its in-store payment system in Australia a couple of years ago, and despite having over 5.5 million customer accounts that doesn't seem to have been a raging success: PayPal Australia only claims 207 stores in total, though some of these appear to be for web transactions only, while others presumably have multiple outlets.

It seems the only way of finding physical businesses that take PayPal is through the PayPal app, but that demands much broader permissions than this writer is prepared to grant.

Similarly, a system that requires the installation of Bluetooth and Wi-Fi hardware as outlined in one of Apple's patent applications seems unlikely to get retailers excited, though it is being tipped by some pundits.

And when all's said and done, it's simpler and quicker to use a real credit card or something like a Coles Pay Tag.

There seems to be consensus that Apple will be launching the next iPhone in September, so we'll soon find out the truth about its NFC capabilities (or lack of them), and perhaps Apple will extend iOS's mobile wallet capabilities at the same time.

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Stephen Withers

Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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