Apple to Dominate Payments?

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By TheCrusader
April 16, 2010

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Hi all

I have scanned the board briefly but have not found reference to these recent Apple patents.

Please consider this link.

Apple introduces us to an NFC-iPhone that will include a built-in scanner, biometric sensor, added camera functionality and a secondary fingerprint scanner for verifying a user's identity to retailers

There is a lot in this patent and it can also be read in conjunction with this one.

There is also another patent that uses the same NFC technology to enable person to person transfers of funds but I cannot find the link

Mobile purchases, p2p payments using phones is a utopia that many telcos, banks, and scheme operations have been looking at for years. There have been numerous NFC pilots around the world and there are some isolated examples of it being used especially for transport ticketing.

Nevertheless full commercial scale roll out has not really happened for a large number of reasons, but what it really gets down to is that every stakeholder wants a piece of the action and wishes to have as much control as possible.

In order for NFC to work it is necessary that there are both NFC transmitters and NFC readers. There are not many NFC capable handsets in the market and the ones that are, are well phones that no one would really want to use like cheap Chinese models. There is not that I am aware of NFC capability on the road maps of Nokia, Samsung etc. Anyway I would discount those manufacturers. In my mind the only ones that count are Apple, Android and the new Windows 7 Phone.

Apple is in a position of strength because they manufacturer the hardware and are in a position to control the eco system

As for NFC readers at the POS, it depends on what market you are talking about but there is already widespread deployment, and it is definitely on the road maps of major financial transaction acquirers. This is being driven by a number of factors including EMV standards, and Visa/Mastercard pay wave initiatives.

As for the mobile network operations they are pushing a standard known as Single Wire Protocol (SWP) to facilitate NFC and payment transactions in general on handsets. Again this is a complex area but what is important to know is that telcos want the crucial credit card information and applications to be kept on the SIM card (even this presents problems as std issue SIM cards do not have the capacity) Telcos rationale for this is security but the real driver is control.

Apple patents are not relying on SWP, looks like they will be storing this data in the phone which is want all the other players want except for the telcos.

It is apparent to me by looking at these patents that Apple are across all the issues and the strategic landscape in general. These patents are putting together the technology to address all the uses in NFC Mobile transactions that have been espoused by everyone for years.

It is likely that they will be looking at a variety of commercial models including a "clip of the ticket". Needless to say that the revenue that can be earned here is more than material

The thing is that in my view Apple is in a position to implement this for the prime reason that they will control much of the eco-system whereas other players only control part of it and they will have no difficulty getting enough of the other stakeholders on board (banks) to make this work.

Anyway these are only patents and if any fool does there own research they will see how complex this area is. This could make serious money for Apple and any prudent investor should keep there eye on this. Don't get caught up in the technology, NFC works, it's the implementation and the commercial model that is important.