Mikey Campbell
A report from The Wall Street Journal explains that Apple is deliberately holding back in the mobile payment arena as a result of "deep discussions" last year.
At WWDC in June Apple announced the new Passport app which is seen as the iPhone maker's foray into the world of mobile payments and will be included in iOS 6 later this year. The system is far removed from offerings like Google Wallet's near-field communications solution and Microsoft's upcoming system that stores credit card and "other mobile-payment" information that can be accessed directly by a merchant.
While competitors are jumping head-first into mobile payments, Apple looks to be merely testing the waters with Passbook, an app that only stores digital versions of loyalty cards, boarding passes, tickets and the like. The app doesn't have credit-card information storage, nor is the next-generation iPhone expected to sport NFC but that is apparently the point.
Apple senior vice president of worldwide marketing Phil Schiller said that other digital-wallet services are "all fighting over their piece of the pie, and we aren't doing that."
Apple's upcoming Passbook app will be included in iOS 6. | Source: Apple
Piper Jaffray analyst Gene Munster contends that Apple is strategically waiting until the market is no longer nascent and can learn from the competition's mistakes. "Apple is always a comfortable number two," Munster said. "They let their competitors do their market research for them."
Apple is actively studying its options, however, and sources close to the matter said iPhone software chief Scott Forstall was interested in the idea of a comprehensive "wallet app" as early as last year. Forstall reportedly put a team together to work out the feasibility of offering direct payment functionality but the idea was scrapped on account of its complexity and the possibility that the company would in some ways need to become a bank.
Instead of a full-fledged "wallet app" engineers decided on the Passbook software which could allow the company to be cut-in on each payment made through the service, a well-worn strategy already implemented in iTunes. This idea too was pared down during an executive review of the overall system in 2012, said a source briefed on the meeting.
Chief Financial Officer Peter Oppenheimer reportedly had concerns about information security while Schiller was worried that poor customer service from merchants might reflect badly on Apple. Thus the ultimate app agreed upon was limited to inessential financial assets.
The story isn't over for Apple's "wallet app," however, as it is unlikely the company can ignore the mobile-payment market for long. According to research firm Gartner, the sector is expected to grow from $172 billion worldwide in 2012 to over $600 billion by 2016.
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53 Comments
Not surprising.
Apple has typically been relatively conservative in picking cellular technologies for its handsets, typically waiting for a given cellular network technology to be well deployed on a worldwide basis before implementing it in their handset. In the last iteration, the iPhone 4S stuck to well-proven HSPA+ technology rather than try to implement LTE (which would have been problematic concerning battery life issues).
For something like NFC contactless payments, there really needs to be a well-implemented worldwide standard before it makes sense to roll out on a handset that is marketed worldwide.
Today, there are too many corporations competing to push their own proprietary NFC "solutions". No one can apparently recreate what happened in Japan and South Korea, so consumers are stuck on the sidelines watching a parade of NFC peddlers walk by.
American Express has sunk millions into failed smart card initiatives including their long-defunct smart-chip equipped cards (I had one of those Blue Readers) and the more recently cancelled NFC-chipped cards. My old American Express Blue card had the NFC chip, the most recently issued card does not. Both of my Chase cards have the PayPass NFC chip, and I've seen plenty of PayPass card terminals in stores, etc., but I've never seen anyone use one.
[quote name="cvaldes1831" url="/t/151139/apple-reportedly-playing-waiting-game-with-mobile-payment-initiative#post_2141885"]Not surprising. Apple has typically been relatively conservative in picking cellular technologies for its handsets, typically waiting for a given cellular network technology to be well deployed on a worldwide basis before implementing it in their handset. In the last iteration, the iPhone 4S stuck to well-proven HSPA+ technology rather than try to implement LTE (which would have been problematic concerning battery life issues). For something like NFC contactless payments, there really needs to be a well-implemented worldwide standard before it makes sense to roll out on a handset that is marketed worldwide. Today, there are too many corporations competing to push their own proprietary NFC "solutions". No one can apparently recreate what happened in Japan and South Korea, so consumers are stuck on the sidelines watching a parade of NFC peddlers walk by. American Express has sunk millions into failed smart card initiatives including their long-defunct smart-chip equipped cards (I had one of those Blue Readers) and the more recently cancelled NFC-chipped cards. My old American Express Blue card had the NFC chip, the most recently issued card does not. Both of my Chase cards have the PayPass NFC chip, and I've seen plenty of PayPass card terminals in stores, etc., but I've never seen anyone use one. [/quote] MasterCard already stated that a company like Apple needs to be behind the shift to NFC. I wonder if that is some foreshadowing. I can see Apple using the hundreds of millions of CCs on file to use as a middle man for all these payments through MC, Visa, and AmEx. They don't have to make a major profit on the transactions. It can be like their other services where it's just a way to sell more HW so their goal is to pretty much break even. That makes me wonder if something like 0.025% per transaction would be more than sufficient to cover their expenses... and then some. For those that have used their Apple Store app to scan and buy a product without assistance from an Apple Store employee you already know they allow for atypical product sales from your phone via the CC on file with your iTS account. This is alright but it's only part of the process, like with PassPort. NFC (or something like it) is the only way to move this to the next level of usability and security. As for first being well-implemented, that's a chicken and egg problem. How did we ever get credit cards, ATM and debit cards in circulation? They are all before my time but i assume it was like most other culture changing conveniences where you have the old and new way being used concurrently until the new way is so popular, well vetted and ubiquitous (for a given area) that the old way just gets forgotten or is kept as a "just in case" backup. Even now we still use cash even though it's a very insecure method of transferring funds. So NFC coming this year to the 2012 iPhone (can't call it the 6th release of the iPhone without feeling Melgross's wrath).
Go slow? More like going nowhere. It seems like we've been waiting forever for NFC technology to go mainstream. They've been doing this in Japan for many years.
I hope that Apple comes up with a more intelligent solution than the current crop of NFC offerings. What I see today in payment technology is actually retrograde. It may be more secure to use a chipped CC but it is also slower and less convenient than the older swipe and sign. The thought of an NFC system that requires me to take my iPhone out of my pocket, out of its protective case and then tap it on a terminal after having stood in line to get there does not strike me as progress. A recent article suggested that Apple would implement payment via Bluetooth which would allow me to pay from anywhere in the store without approaching a terminal made a lot more sense to me.
[quote name="Shaun, UK" url="/t/151139/apple-reportedly-playing-waiting-game-with-mobile-payment-initiative#post_2141921"]Go slow? More like going nowhere. It seems like we've been waiting forever for NFC technology to go mainstream. They've been doing this in Japan for many years. [/quote] That means nothing on so many levels.