iPhone payment systems integrate near field radio chips into iPhone and iPad devices. Image: Flickr / andyonflickr / CC-BY-ND
The next generation of iPhone and iPad devices are going to have integrated payment systems. Apple has been investing in Near Field Communication technology for the last few years. The NFC-based payment systems require additional equipment from merchants, so adoption may or may not happen.
iPad and iPhone payment systems
Several news sources are reporting that Apple plans on integrating near field communication chips into the next generation of devices. The NFC chip would transmit a short-wave radio communication that deducts money from an account. Most reports are that the iPad/iPhone payment system would use iTunes money as currency to pay for items and products with an Apple device.
Adoption of mobile payment systems
Mobile payments are a growing field. The ability to pay for purchases using mobile phones has been used widely in Europe for several years. In the United States, PayPass-based systems have been tested in some areas, but have not gained wide acceptance. Starbucks recently launched a mobile payment system for iPhones and Blackberry phones that scans barcodes displayed on the screen. Mobile payment systems have also been developed on the merchant side, with systems such as Square turning cell phones into credit card readers.
The problem with NFC, the iPhone payment system
Near Field Communication is a payment system based on close-range radio signals. NFC based payments have been tested in some markets, but there are significant barriers to entry. Merchants have to purchase or lease, set up and maintain radio signal receivers that work with near field communications transmitters. Most often, this represents a significant investment. It is a chicken-and-egg situation — merchants do not want to make the investment until enough customers will use the payment system. Customers won’t use the payment system until enough merchants accept it. Apple is hoping that its huge share of the market will help push NFC to that market saturation point — and get them a cut of the fees in the process.
