2014 Could Be The Year That Apple Changes Course On Mobile Payments

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NFC RUMORS COULD MARK APPLE'S SEISMIC ENTRY INTO PAYMENTS: Apple will integrate NFC (Near-field communications) into the new iPhone 6 and iWatch, which will release this year, predicts Apple analyst Ming Chi Kuo, of KGI Securities. If Kuo's right, as he has so often been in the past, the move would signal Apple's long-anticipated entry into mobile payments, a market in which the company would instantly wield tremendous power. Apple has 600 million customer accounts on file, most of them linked to a credit card. Apple's entry would also finally set a firm agenda for retailers facing a confusing array of payment technologies. "Every time I bring up payment platform options with my executives, they say 'Let's just wait and see what Apple does,'" one retail industry insider tells us.

ANOTHER FALSE RUMOR? But Apple watchers note that the company has long favored Bluetooth over NFC. They point to the recently released iBeacon technology - which runs on a battery-friendly form of Bluetooth - as a potential mobile payments platform. But in a patent approved in January, Apple describes a mobile payment system that uses NFC to establish an initial secure link with a point of sale, and a secondary link using technology "such as WIFI or Bluetooth, that has more desirable characteristics for maintaining the link over time than NFC." Similar rumors about Apple's plans for NFC have flared regularly since at least 2010, when the company hired Benjamin Vigier, whose experience included work on white-label NFC wallets. But all the past rumors came to nothing.

The Apple rumors come amid renewed buzz on NFC's prospects, spurred in part by host card emulation technology, which allows mobile payments to work without needing to access special hardware on a phone, known as the Secure Element, which is controlled by the wireless carriers. "I feel that NFC payments are currently getting a shot in the arm with the emergence of HCE," writes Windsor Holden, research director at Juniper. As we reported last week, Google has now turned to host card emulation for all Google Wallet mobile payments. Holden also sees NFC payments infrastructure gaining traction: "In Europe at least, contactless infrastructure on the retail side has increased dramatically over the past year." In the U.S., Merchants Warehouse, which provides payments tech and services to retailers, has also said that it will include NFC in its terminals. (Keith Griffith for BI Intelligence)

GOOGLE WALLET MEETS RESISTANCE FROM WARY RETAILERS: Lauren Johnson for Mobile Commerce Daily - "Retailers are still skeptical on the Internet giant's intentions … 'Savvy merchants are well aware of Google's intentions - it's after data,' said Jordan McKee, analyst for Yankee Group … 'Larger merchants, and especially tier one merchants, want Google nowhere near their transaction data' … Retailers, including Express, Starbucks and Wendy's, are choosing to develop their own branded mobile payment apps … Google ... does have two factors working in its favor: Brand recognition and a solid user base." (Mobile Commerce Daily)

QUOTE OF THE DAY: "Just as an engine loses energy because of friction, so the economy loses energy because of payments friction. Effort that should be spent on developing new products instead goes on papering over the cracks, effort that should be spent on helping customers gets diverted into annoying them and effort that should be going into creating fantastic new services instead goes into [meeting security standards] PCI-DSS certifications and sending out breach letters," says Dave Birch of Consult Hyperion. (Tomorrow's Transactions)

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