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Apple: the 800 pound gorilla of mobile payments

To date, the poor availability of phones with NFC technology has been one of the factors holding back the use of this technology to enable wave-and-pay mobile payments in a shop or peer-to-peer payments by touching phones together. It seemed earlier this year that bridging technologies may provide the kick start needed for contactless payments to really take off, but now there’s another contender for moving things forward, and one that is renowned for ‘game changing’ the market: Apple.

The rumours around Apple’s  interest in NFC technology and mobile payments have been growing for some time now – filing patents, hiring product managers, working with Gemalto on SIMs (see appleinsider for numerous reports), and now they are alleged to be in a bidding war with Google for Boku . It seems increasingly likely that the “iPhone 5” will come with NFC built in, and some kind of mobile payments.  But what would this mean for the market? Smartphones are an increasing proportion of new phone sales. Apple is number 3 in smartphone sales behind RIM and Android phones, but they do grab the headlines, and other phone vendors seem to follow. So we could see all smart phones NFC and mobile payments enabled. Now that would move the mobile payment market forward. But I wouldn’t bet on Apple following the emerging standards. They seem to blaze their own trail and I expect they’ll want a piece of the transaction to fuel their burgeoning revenue.

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Comments: (3)

A Finextra member
A Finextra member 05 November, 2010, 11:27Be the first to give this comment the thumbs up 0 likes

Most commentators have connected the Gemalto linkage with choice of phone networks. Like you, I believe it is about payments. It's all speculation of course, but I wonder whether Apple believes they can charge for a each transaction, or whether they are just providing an enabling technology framework in a bid to become the default e-wallet. And, as you say, Apple likes to do things differently, but  banks like standards. If each phone platform offers similar functionality but different APIs and methods, either takeup will be limited, or third parties will step in to intermediate between the banks and the phone vendors.

A Finextra member
A Finextra member 05 November, 2010, 12:01Be the first to give this comment the thumbs up 0 likes

Thanks for your comments Chris. I think the work by Global Platform with the GSMA and EMVCo offers the best bet for standards, but as to whether Apple will support those, we can only speculate. I recon Apple will want a piece of the transaction value. Perhaps some kind of link to your iTunes account, enabling you to charge retail purchases to this (for a fee to Apple), and transfer peer to peer to someone else’s iTunes account. But again, I am only speculating. I absolutely agree that widespread takeup of mobile payments will only come through the use of standards.

John Dring
John Dring - Intel Network Services - Swindon 05 November, 2010, 12:45Be the first to give this comment the thumbs up 0 likes

Hmmm.  The UK has standards for Mobile Payments - its called Payforit, but I don't see that it has driven a rush to 'paying with your mobile'.  Its not heavily promoted by the Operators themselves and still seen as a little clunky (partly to ensure the consumer is not suckered into unwanted purchases). 

So far NFC payment trials have all been a case of sticking a credit card onto the phone - so nothing really mobile about it - its just the card network again.

Boku (mentioned in this post) reverts back to brokering the use of SMS billing afaics which still works well but has limitations (no refunding, no txn description etc) and they targeted the signup of Merchants wanting to sell their stuff and have the customer stick it on their phone bill (presumably its the merchant base which is of interest).

Google is their own standard. Apple is their own standard.  They both do pretty well creating their own eco-systems, so I don't think a payments standard will prevail - too many conflicting parties.

PayPal mobile works well for me, but its linked to a bank account and these days I mostly do payments online

My guess is a nice mobile Payment App will surface that gets consumer attention and takes off to become the new 'standard'. Google/Apple/Nokia etc have the benefit of at least being 'trusted' to be there tomorrow, rather than a new entrant at this point.

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