Article

iPhone 5 features Passbook loyalty app, but no NFC

Apple unveils a new design for its flagship phone but doesn't include near field communications.

September 17, 2012 by James Wester — Editor 1, Mobile Payments Today

The iPhone 5 has arrived.

Apple unveiled its flagship device at an event at San Francisco's Moscone Center last week amid the hype that usually surrounds Apple events. And while the new iPhone 5 offered some new features, namely a larger display and thinner profile, as well as the potentially game-changing loyalty app Passbook, it did not include one feature that many in the mobile payment space were hoping for: NFC.

Rumors and counter-rumors had been flying for months preceding the launch, with leaked photos of the device used as evidence that the new iPhone either would or would not incorporate NFC. But in the end, NFC was left off of the new device.

So now that the iPhone 5 is being released without the technology — which many mobile payment schemes use to transmit data at the point of sale — the big question becomes, "What does this mean for mobile payments and NFC?" Is Apple's omission of the technology from its popular smartphone enough to make a difference in the adoption of NFC, or in the way mobile payments develop?

A speed bump, not a roadblock

According to Steve Gurley, president of Pyrim Technologies Inc., a startup focused on the marketing potential of NFC, the absence of the technology in the iPhone 5 isn't going to kill the technology. If Apple doesn't have it, he said in an interview, NFC will still advance, if only a little more slowly.

Gurley pointed to other manufacturers, such as Samsung, RIM and Nokia, who are adopting NFC. "You can't ignore that others are integrating NFC in their devices," he said.

The problem now with NFC may be that consumers don't know enough about it, or haven't seen enough compelling use cases, to demand the technology in their devices, Gurley said. "The use cases are easy to understand," he explained, "but there's no unified use case that consumers can rally around. It'll be up to developers to come up with compelling use cases people can understand."

And what about the one use case that the mobile payment market wants NFC for — namely, using the smartphone to pay for things at the point of sale? Gurley said NFC and mobile payments shouldn't be thought of as the same thing, and how they develop is not mutually dependent. "So many people have confused NFC with mobile wallet," Gurley said. "Some have concluded no NFC, no wallet. You don't have to have NFC to have a wallet."

Missing the NFC boat

For Einar Rosenberg, who has been working with NFC technologies for more than a decade, not using NFC in the iPhone doesn't hurt the technology at all; it hurts Apple. He too pointed to other manufacturers who use the technology as an indication that Apple is out of step.

"We know that nine out of the top 10 phone makers are putting NFC into their phones right now," Rosenberg said in an email. "We know over 100 million mobile devices today are NFC-enabled — 20 million plus in the U.S." All the major wireless carriers have committed to NFC as well as many mobile operators worldwide, Rosenberg said. And he added that the majority of phones released by wireless companies in the U.S. in the past three months are NFC-enabled.

What's more, Rosenberg said, it's not about carriers and handset manufacturers pushing a technology that no one wants.

"NFC isn't theoretical," Rosenberg said. "People are actually using it."

According to Rosenberg, there are already more than a thousand NFC apps available for Android and a number of industries are integrating the technology.

"NFC has existing infrastructure from very large industries, such as millions of payment terminals at hundreds of thousands of retailers; the majority of major cities have NFC-capable transit, and the majority of access control systems are NFC capable," he said.

That's not to say Apple is completely eschewing mobile transactions using the iPhone 5. During the announcement, the company showed off its new hardware by demonstrating the Passbook application it's bundling with its next generation mobile operating system, iOS 6. Passbook is a "lite" version of a digital wallet that allows users to virtually store tickets, gift cards and boarding passes, all of which are updated in real-time. Anything in the digital wallet that uses a QR or barcode for recognition can be scanned on the phone. In time, the app could integrate NFC to transmit the data from tickets or loyalty cards stored in the app.

(A version of this story originally appeared on Mobile Payments Today.)