A fresh round of Apple Inc. rumors indicates the technology giant will include Near Field Communication in the next versions of its iPhone and iPad. And while the technology continues to stay atop the leaderboard as the payments industry’s ideal mobile-payments method, at least one observer believes barcode technology ultimately will prevail.
It will do so partly because merchants would need no new hardware, contends Richard Crone, founder and CEO of San Carlos, Calif.-based Crone Consulting LLC.
“Several very well-funded mobile-payment startups have been working in stealth mode for some time now to provide mobile payments at the physical [point of sale] with no new hardware required by merchants and financial institutions,” Crone says, referring to tests involving barcode-based payments.
Crone points to successful barcode initiatives at Starbucks Corp. and Target Corp.
Starbucks’ payment application, which works with iPhones and iPod Touches and some Research in Motion Ltd. BlackBerry devices, enables users to pay for purchases by displaying a bar code on their phone’s screen at checkout. The cashier scans the bar code, deducting funds from the customer’s prepaid Starbucks Card account (
Target has a similar system within its mobile app that enables consumers to pay using the store’s closed-loop gift cards.
Crone deems NFC an “old technology.”
The ultimate measure of how merchants view NFC is that none has ever used the technology with their private-label credit or gift cards, he says. “All new payment types start with merchant acceptance,” Crone says.
Various entities are trumpeting an NFC revolution, but Crone doubts the technology will win in the end mainly because a business model has yet to be established.
NFC’s primary setback has been how the card brands, issuers, mobile operators and handset manufacturers divvy up transaction revenues, Crone says. “There are a lot of mouths to feed in that model,” he says.
Crone and others also have doubts about Isis, the joint venture between wireless carriers AT&T Inc., T-Mobile USA Inc. and Verizon Communications Inc. and Discover Financial Services, Barclays PLC’s Barclaycard US (
Skeptics base their doubts about Isis on the contactless technology’s slow progress.
“Contactless acceptance stalled at a certain number of merchants because there weren’t enough users using the cards, and not enough merchants signed up,” says Todd Ablowitz, president of Double Diamond Group LLC in Centennial, Colo.
Apple could determine NFC’s success. The Cupertino, Calif.-based company long has been rumored to have plans to include NFC functionality in the iPhone, maybe as early as this year.
Observers believe Apple also has the capability to create its own payments network using its iTunes service as a way for consumers to pay for goods at the point of sale.
Apple also could supply merchants with terminals if it decides to use NFC in its phones, Crone says. At the moment, Crone believes Apple has a sizable advantage over Isis in terms of potential users because more than 200 million consumers have iTunes accounts.
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