Speculation that Apple Inc. plans to develop a payment-enabled iPhone increased with its hiring of mFoundry Inc. executive Benjamin Vigier.
Vigier was instrumental in the development of mobile payment applications for PayPal Inc. and Starbucks Corp.
Though Apple has never publicly stated its intentions to enter the mobile payments space, observers believe an iPhone with a near-field communication chip is imminent based on several of its recent actions.
Apple appointed Vigier product manager for mobile commerce, according to a report in Near Field Communications World. That could suggest the company is laying plans to turn its handsets into mobile payment devices.
Vigier, who joined Apple this month, developed the mobile service for PayPal, a unit of eBay Inc., and the bar-code-based mobile payments system for Starbucks while working at mFoundry, a mobile payments company.
The blog TechCrunch reports that Apple, in addition to staffing a mobile commerce unit, already has built NFC-enabled iPhone prototypes using chips from NXP Semiconductors.
Apple also has filed patents related to NFC technology and an iPhone application that would initiate mobile payments.
Apple integrating NFC with its iPhone hardware "has been anticipated for quite some time now," said Red Gillen, a senior analyst with the research firm Celent.
Todd Ablowitz, president of Double Diamond Group, a consulting firm in Centennial, Colo., said he believes an NFC-enabled iPhone will be available next year.
Apple, however, will still need to figure out its place in what has become a complicated business model for NFC, Ablowitz said.
The technology's primary challenge has been determining how to share transaction revenues among the card brands, issuers, mobile operators and handset manufacturers.
Apple's entrance into the conversation is notable because the company has "been so incredible in reinventing business models," Ablowitz said.
He said Apple can change the payments business model in a way that could cause quite a disruption. Payments "is arguably inefficient in terms of the value chain, it's got entrenched, long-term players, it's got technology disruption ripe to happen and it's an ecosystem where a leader could make big gains," Ablowitz said.
Apple could revolutionize payments in some of these ways with, say, an "iTunes wallet," Gillen said.
An iTunes wallet would be built from the payment system in iTunes, Apple's proprietary digital music player application. Consumers can buy music, movies and mobile apps from the iTunes store without having to enter credit or debit card information after an account is set up. Apple has already expanded this system beyond the home computer to allow iPhone users to spend money on media directly from their phones.
Apple most likely would incorporate the iTunes model into an NFC iPhone application, Gillen said. Apple has filed a patent around this concept.
Consumers could use the iTunes wallet to pay for goods at the point of sale. "That's a big deal, because you're competing with a lot of established players" in the payments ecosystem, Gillen said.
Apple should be able to find a way to enter the brick-and-mortar environment because retailers are demanding mobile payment products, Ablowitz said.
"Retailers feel like they've been abused in acceptance in payments for many years," he said. Retailers "expect to benefit from this technology. They will be very active in the conversation and use their clout to meet their objectives."
Apple is interested in more than NFC payments. It has filed a patent for a marketing and promotion engine it would maintain, Gillen said.
"People could use the phone to look up the most optimal price on goods and look up discounts and coupons," he said.
Simply implementing the NFC technology in the iPhone will be the least of Apple's concerns, Gillen said.
"How the iTunes wallet works or how the promotional stuff works is going to be the bigger question," he said.
