Why NFC on iPhone doesn't matter. At all.

The rumours about iPhone and NFC are being circulated again. That caused a new wave of excitement within the NFC community where NFC-enabled iPhone is seen as the white knight. Yet, if (IF!) Apple introduces NFC on iPhone that won't change much, if anything at all. Here's why.

The largest and the most compelling use case for NFC on a mobile phone is transit (70% of the mobile payments industry agrees on that). However, just a very small fraction of transit ticketing deployments is based on contactless EMV. The bulk of transit worldwide is based on proprietary standards and protocols, e.g. ITSO in the UK, Calypso in France and some other countries, etc. All those standards and protocols have zero interoperability. 

But that's not all. Within the UK alone, every transit operator and every local authority that implemented ITSO-based smart ticketing uses proprietary security keys...

Hence, for NFC-enabled iPhone to be used for transit in the UK, the following needs to happen:

ITSO must certify iPhone's secure element to insure full compliance with applicable standards. Will Apple be even applying for such certifications in every country where smart ticketing is implemented in transit? You can guess the answer... Even if ITSO unilaterally declares NFC iPhone to be ITSO-compliant (why would they do that?!), the issue of security keys remains.

Will Apple knock on the door of every transit operator round the world to offer them free access to iPhone's secure element? Silly question. Can Muhammad go to the mountain? Sure. Will Apple talk to West Yorkshire Ticketing Company (no disrespect, M-Card, just being realistic here)? I start sounding like a stand-up comedian...

Let's say the miracle happened, and the big mighty Apple agreed to rent some space on its secure element so that West Yorkshire's M-Card can reside on NFC-enabled iPhone. And Apple asked just for a small fee or transaction percentage (say 0.3% compared to 30% they get from app developers). And suppose West Yorkshire Ticketing Company is willing to pay the price. Guess what! They cannot do so without going through the tendering/procurement process... 

Multiply the above by the number of major handset manufacturers worldwide and have one more laugh.

Transit aside, there are almost twenty thousand financial institutions in the US who issue payment cards. Can they realistically make a deal with Apple, Samsung et al?..

Where does all that bring us to? Two key conclusions.

Cards are here to stay. You cannot stick a mobile phone into millions of ATMs and ubiquitous card terminals which are present everywhere you want to pay. Add the explosive mPOS revolution to the equation and sprinkle with the fact that 90% of those mPOS devices do not have contactless interface...

Mobile transit ticketing needs a focused and dedicated effort by a company determined to make it work. The one which can talk to every operator out there, including West Yorkshires of this world. The one which is willing to bend backwards to stitch together all those isolated standards, protocols and hundreds of security keys, and integrate them all via a single form factor. That won't be Apple or Samsung. And that form factor won't be a mobile phone...