iPhone5 aftermath: Apple deals blow to mobile commerce

By Duncan Craig | 13 September 2012

Brands and marketers looking at enabling mobile commerce offerings on the iPhone might just have to wait until 2014 before they start offering “wave and pay” technology at the point of sale.

Apple's new iPhone5 device was announced this morning with the usual fanfare, but the company decided against including a near-field communications (NFC) chip in the device, which enables people to use their handset as a mobile wallet.

For NFC to work, the phones need to have an embedded chip that communicates with the merchant solution at the point of sale. The new Nokia phones, the Samsung Galaxy S3, and the forthcoming Blackberry 10 are embracing NFC, but Apple has taken a wait and see approach to the merchant payment system.

“It's a little step back as a lot of people were waiting for it to happen,” said Iain McDonald, founder and chief creative officer of Amnesia Razorfish. “The industry wants NFC and the sooner we have it the industry can move forward.”

McDonald said if Apple had introduced NFC it would have left retailers and brands scrambling to create offerings for their consumers. Now they have time to start working out what they can do with the technology.

“NFC or an equivalent technology is inevitable,” McDonald said. “Marketers and advertisers can now do more test and learn and brands will start considering NFC and what it can do for them. 2014 is probably the year of NFC.”

Technology news provider Gizmodo said it's likely Apple will now introduce NFC a year from now. Apple's existing Passbook technology is seen as the backbone operating system for it to integrate NFC in the future. In the meantime, mobile payments will not explode in the consumer retail market.

“It's quite likely that mobile wallet technology will be hindered by Apple's decision,” said Foad Fodaghi, principal analyst at research firm Telsyte. “However NFC is a standard technology that will sit in Apple's products in the future. They can't ignore it.”

The omission of NFC in the iPhone5 is a set-back for the providers of the NFC wave and pay technology, and those betting on the iPhone space will have to re-consider their strategies. One player, Tapit, said it would look to the fast growing Android market in Asia in the wake of Apple's decision.

Tapit said with the iPhone owning 40% of the Australian mobile phone market, Apple's reluctance to integrate will hold the mobile payments market back, and potentially drive people to the more open Android platform.

“A lot of consumers do not want to be hindered by the Apple ecosystem,” said Cameron Curtis, commercial director, Tapit. “For brands and retailers the mobile wallet will be shelved and they they will stick to standard credit card payments.”

Curtis said the boom in the Android mobile market would provide plenty of opportunities for growth, as younger consumers are increasingly embracing that operating system.

The other scenario is that Google heads off Apple before the NFC chip is embedded in the iPhone, and launches a full-scale Google Wallet service in Australia. One industry source said that Google was in advanced talks with the major Australian banks to undertake an assault on the local mobile payments market.

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