27 November 2015

Contactless iPhone: Hype or harbinger of things to come?

28 January 2011  |  12914 views  |  1 iphone apps on screen

With the hype building ahead of Apple's widely expected step into contactless payments through the upcoming iPhone 5, IDC Financial Insights analyst Aaron McPherson has moved to dampen over-excited expectations.

In a blog responding to the recent Bloomberg story on NFC-enabled iPhone 5s and iPad 2s, the research house's practice director flags several issue he argues could hamper adoption of the technology.

McPherson hazards a "guess" that there around 150,000 MasterCard PayPass-enabled terminals in the US, less than five per cent of the total, and a figure that needs to rise considerably to encourage mass adoption.

He also questions how important a player Apple is in the face of a fast growing, open standard, Google Android operating system which is also preparing for NFC, and asks how much Apple will charge merchants.

However, the biggest question posed by the analyst is will Apple's implementation be open or will, as history suggests, it operate a closed shop? If this is the case he argues "competitors will continue to forge ahead" especially as NFC is an open specification, restricting its control.

"Ironically, Apple would probably be better served by making its implementation open, because then it could choke off the efforts by Visa and Device Fidelity to add NFC to the iPhone," he argues.

Concludes McPherson: "In short, as with Isis [the venture from a group of US telcos], I would be much more excited about this news if it came in the form of a larger alliance of banks, mobile operators, terminal manufacturers, retailers and device manufacturers to support an open NFC standard, using existing payment networks as the platform. That is probably not going to happen in the next year, so I don't think this will move the market much."

While numerous competing contactless offerings pepper the US landscape, France and Singapore have both embarked on wide-ranging collaborative interoperable NFC projects of the sort favoured by McPherson.

The mobile contactless payments debate rages, with Finextra community members divided on the value of recent developments such as the latest Barclaycard and Orange project, Google's plans and the new Starbucks app.

Comments: (1)

Steven Klebe - Google - Mountain View | 28 January, 2011, 19:28

I completely agree with this assessment.  The inertia that has to be overcome to make NFC meaningful is Mt. Everest sized.  The biggest issue is any meaningful long term benefit to the merchants.  There might be a short term pop from limited availability and therefore drive some marketshare but this would be neutralized very quickly.  And, as merchants have learned time and time again, each new payment method adds cost and complexity to their operation, training, customer support, etc...  Unique situations like the Starbuck's mobile app driven by the frequency of visits and clear ROI that merchant's get from the loyalty driven around pre-paid (+ auto top up like this program) makes this a clear winner, but that will not always translate into other situations.  BTW, a recent comment I saw about the lack of TIPs offered up by users is more than offset by the increased frequency of visits which clearly benefits the employees, albeit not as directly.  And, as a user, I would not be oppossed to an option in the application that enabled me to "auto-tip" as part of the transaction.

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board, sign up now.

Related blogs

Create a blog about this story (membership required)

Related stories

27 January, 2011
27 January, 2011
20 December, 2010
16 November, 2010
20 August, 2010
20 August, 2010
16 August, 2010
02 August, 2010
10 June, 2010
21 May, 2010
05 May, 2010
05 May, 2010
11 November, 2009
30 March, 2009
19 March, 2009
09 March, 2009
24 February, 2009

Related company news


Who is commenting?

Finextra Member Commented on: EPC publishes proposal...
Finextra Member Commented on: EPC publishes proposal...

Top topics

Most viewed Most shared
BBVA buys 29.5% stake in Atom for £45...
7713 views comments | 34 tweets | 41 linkedin
BNP Paribas to test contactless payment di...
6022 views comments | 17 tweets | 25 linkedin
Former Barclays chief forecasts massive jo...
5621 views comments | 27 tweets | 29 linkedin
Hilton confirms data breach
5299 views comments | 11 tweets | 17 linkedin
Alternative payment methods challenge plas...
5135 views comments | 21 tweets | 23 linkedin

Featured job

up to £95K base, £190K OTE, benefits
London, UK

Find your next job