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Why The iPhone Still Matters To Mobile Payments

Months before the iPhone 5 was released, the industry was a buzz of rumours on the details of Apple’s new device. New connectors, a new OS, thinner, taller. But one feature that received wide-spread attention from the banking industry was the rumoured inclusion of an NFC Chip. Something that anticipated bringing mainstream scale to a technology that could replace the need for us to carry wallets full of plastic credit & debit cards. Who could forget Google’s George Costanza advert for the Google Wallet, the first NFC Mobile Wallet

You can imagine the disappointment when the device was released without NFC. And you won’t need me to remind you NFC is a contactless info-sharing technology that can be used to make payments with your phone, or act as a shortcut for grabbing or sharing info when used in conjunction with NFC tags, stickers and the like.

Rumors about the new iPhone having NFC, but at this point, they seem like a total long shot. Passbook in iOS 6 seems like a natural fit for NFC. But after a false alarm that the leaked internals showed an NFC chip, it turned out that’s highly unlikely.

You’ll also know NFC is kicking around in plenty of smart phones these days — including theSamsung Galaxy S3, the HTC One X, the Sony Xperia S and P, the BlackBerry Bold 9790 andCurve 9360, and the forthcoming Nokia Lumia 920 – to name just a few NFC-enabled devices that spring to mind. Simply put, the industry was waiting with baited breath. Would NFC in the iPhone finally create the impetuous to drive mobile payments… Unfortunately not with the iPhone 5.

Since the iPhone 5 release, dozens of other devices have hit the market with NFC embedded, including this year’s hits HTC One, Samsung Galaxy S4 and Blackberry’s Z10. Yet we still haven’t seen any large steps forward in the adoption of NFC. Isis, a joint venture between AT&T, T-Mobile and Verizon Wireless in the mobile payment space, announced on 16 November 2010 was meant to represent a collaborative approach, but two and half years later ISIS remains a mystery. The system is reported to be based on near field communication (NFC). Notably, Sprint is not part of the consortium.

“The telcos keep on doing the same thing, they get arrogant and then they get disintermediated,” MasterCard’s Jorn Lambert has told The Australian Financial Review.

"He said the problem centred around the “secure element”, which has traditionally been stored in the chip or magnetic stripe of plastic credit cards. While telcos want to charge banks to store it on SIM cards, financial institutions have claimed this would be too expensive.

So therefore you need either [a vendor like] Samsung or the telco, and it’s not a technical impediment but a commercial impediment,” he said.

The telcos are about to be passed by because the manufacturers have realised they can also install the secure element.

Because there are fewer of them, by having deals with Samsung, BlackBerry, Nokia and Apple you’ve covered the world. We’re already starting to see that and the writing is on the wall. The telcos keep on doing the same thing, they get arrogant and then they get disintermediated.”

Cities around the world have made attempts to deploy mobile based payments systems, like StarHub’s Smart Wallet in Singapore, Maxis in Malaysia, even London’s Bus Network. Yet one statement haunts every single deployment…. What will Apple do?

What will Apple do?

A statement that not only haunts the market, but prevents organisations from making attempts in the space. Granted the iPhone has a market scale that is hard to ignore, but postponing an implementation based on a theoretical move by Apple is absurd. What it actually does, is leave the door wide open for Apple. The industry has given Apple a Golden Ticket to own the space, purely by their apprehension in doing something.

Do we seriously live in a world were organisations live in fear of the world’s most innovative companies to the extent that we leave opportunities wide open so these innovators can continue to dominate?

It’s for this very reason, that the still non-existent iPhone 5S or iPhone 6 remains a heavy influencer on the future of mobile based payments. Purely because we continue to leave the door open. Why?

During recent conversations Apple CEO Tim Cook left the door open for an iPhone 6 with a larger display and the rumors of a higher resolution iPhone 5S point to the possibility of a bigger screen in an iPhone 6 for 2014.



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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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