Mobile Wallet Media is a news media, analyst, marketing and consulting firm focused on the future of mobile: payments, marketing, loyalty commerce, security, prepaid, virtual currency, daily deals and the convergence of them all with social and local. The Chief Editor, Randy Smith, was the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner.
According to early media leaks it seems to be an all foregone conclusion that Apple will announce on September 9 that it's entering mobile payments. Amid these reports NFC will be in the iPhone 6. This could turn the beaten down reputation of the 'Not For Commerce' chip into the centerpiece of an iCommerce platform. If Apple enters the game armed with NFC, PayPal and MCX may need to adjust their game plans. But of course, just because Apple adds NFC to their iPhone 6 does not mean it will be instantly used or accepted everywhere. It may take years for the POS terminal base to pass the 50% mark of being equipped with EMV/NFC. If Apple enters payments plus adds offers/loyalty it may be 1-2 K.O. punch. Adding fuel to the fire for NFC being in iPhone 6 it's been reported McDonald's will soon be training employees on NFC mobile payments.
Beyond payment NFC can be used to replace a QR code scan from a label or poster in store to redeem a deal, add an item to a shopping cart or even purchase an item. A recent VentureBeat article lays out several alternative uses for NFC and explains how it works. The article states "... a phone with an NFC chip could pair with Bluetooth headphones or wireless speakers with an NFC chip inside — like Beats speakers, for instance." My question here is there more than meets the eye with NFC? Is there a way to use NFC to pair BLE devices and yet keep it secure? It seems Bluetooth pairing with for instance the PayPal Beacon requires interacting with the POS to pay with PayPal by selecting the option to pay with PayPal and then perhaps entering a PIN.
The way I see mobile payments most streamlined for speed and secuirty is a combination of NFC used for speedy pairing to terminal. Apple Touch ID, paired with BLE and NFC could truly mean contactless payments not requiring OTA or cloud based credentials. A tokenized credential will rest on the phone in an Apple controlled secure element and securely passed along through BLE pairing with the NFC/POS enabled terminal. For the older 4S/5 or 5S iphones a slightly different secure infrastructure may enable secure payments. The iphones 4S/5 do not have Apple Touch ID, but is does have BLE. Payment technology expert Cherian Abraham posted a must read analysis predicting months ago how Apple might enter payments without NFC:
"If Apple uses NFC, its role will be to facilitate an out-of-band key exchange, to secure the subsequent Bluetooth communication - so that an iOS device can trust the Point-of-Sale and securely transmit payment data. Data that may include any and all tokenized payment credential along with loyalty, couponing and everything else. Using NFC for out-of-band authentication in conjunction with the authentication IC (provided by Apple) in the Point-of-Sale, Apple can run circles around the limitations imposed by a pure NFC approach – exceeding it on usability, security, adaptability and merchant utility."
PayPal is already placing heavy bets on it's Beacon and Code products to enable mobile payments. They have partnered with integrated POS systems to enable their plug and play beacon hardware and QR code payment software. Seeing that Apple has delayed entering the payments race for so long, perhaps to allow it to mature, will it not ride upon a strategy of bridge building that PayPal has already paved? I'm not talking collaborative commerce here. I'm talking Apple entering the race to control a majority of future mobile payment transactions. Seeing this is how Apple rolls, why would we expect to see a different agenda? If this be true and to quicken the bridge building, might we see Apple introduce it's own iWallet tech app that enables whichever technology a retailer has adopted, be it NFC, QR codes or BLE? Such an app may mirror my 2012 invention (see below - prior to BLE being popularly tendered as a POS bridge) which is a type of "Future proofed mobile wallet platform that is mobile payment POS agnostic. An end-to-end Apple ecosystem could direct the transaction via an ipay app (upgraded passbook) tailored by iPhone used. It also seems Nordstrum's is adopting the coming 'PayAPPle' app.
The 'Disruptive Innovation Meteor' named MOBILE has struck the world's of retail payments, banking and marketing. Firms wanting to survive, compete and win in this new environment must adapt by embracing disruptive innovation or risk becoming irrelevant or extinct. Read story
Could Apple introduce it's own 'iPay Beacon', integrated circuit and 'iNFC' peripheral to speed things along? Effectively they would be laying down their own rails to hasten the connection between mobile and POS. Think of this like the cell tower coverage race in the 1990's and 2000's. While PayPal has 150 million accounts, Apple, the 800-million iTunes accounts gorilla with near 10-fold market cap, is a menacing threat able to surpass PayPal that has barely gained traction towards physical world transactions.
So if this does play out as such then what is PayPal to do? Can they possibly compete head to head with Apple? Maybe it would finally be time they consider that merger or a much stronger partnership I suggested with Discover? Why? Two can play at the game of riding rails. Discover is accepted at 99%+ the merchant locations as MC/V. I spelled out with clarity how any of the major networks could instantly enable mobile payments without NFC or new hardware at POS by making use of my 2010 invention using "Merchant Mobile Payment" cards or integrating to POS software.
With Apple entering mobile payments, SPEED by all current players is of the essence.
On the subject of speed, let's consider what Apple's mobile payment solution might look like with NFC or BLE? Apple's Touch ID will be at the center of payment authentication in lieu of a pin or logging into an app. So you'll simply walk up to the point of sale, place your thumb on the phone to authorize use of mobile app and mobile payment. With NFC you'd simply wave or tap your phone unto terminal to pay. With BLE you'd likely just tap a button and perhaps enter a PIN on the terminal or your phone to complete payment. So there you have it as quick, if not quicker, than pulling out a card from your wallet to pay! However the road between here and ubiquity may yet be a longer one. It may yet be 2-5 years to approach universal reach by a single mobile payment platform. Most all merchants will still need to spend significant resources to enable mobile payments. Even post the September 9 announcement we will not be that much closer to having a standard for enabling mobile payments, that is unless one or both of my alternative solutions is adopted by Apple, PayPal or another to SPEED adoption.
If you have yet to do so you might find it worth the time to read my 2012, 7-week series "The 7 S's Required for Success in Mobile Payments". We'll see you on the other side of Apple's entry into mobile payments.