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iPhone 5's lack of NFC doesn't matter, survey shows

Matt Hamblen | Sept. 17, 2012
Apple apparently made the right decision to omit NFC from the iPhone 5, given that 68% of U.S. consumers prefer to buy good using cash and credit cards over mobile wallets, according to a recent consumer survey.

ISIS maintains that NFC is the most secure technology for modernizing payments.

Nonetheless, while NFC technology is widely used in South Korea and Japan for transit and for retail purchases, it is only starting to catch on in Europe and North America.

Part of the reason for the slow start is that just 2% of all merchants worldwide have installed terminals or software that can read NFC transmissions, according to Aite Group.

Avivah Litan, an analyst at Gartner, said that Apple didn't miss the boat by not installing NFC chips in the iPhone 5.

She noted that recent partnership agreements by Square and Starbucks and by Home Depot and PayPal for use of in-store mobile payment systems that don't use NFC technology "prove that [non-NFC] mobile payments can be as, or even more convenient for consumers than those with NFC."

PayPal's approach with Home Depot and other retailers allows an in-store buyer to input a mobile phone number and PIN on a terminal keypad to authorize a payment, while Starbucks scans barcodes on a smartphone with an optical scanner much the same way Apple's Passbook works.

While Starbucks has been using its optical scanning of barcodes on smartphones for more than a year, its impact on the public's perception of mobile wallets doesn't seem to have been picked up in opinion surveys such as the recent one by creditdonkey.com.

"I expect that context-aware mobile payments like Square and Starbucks will have a much bigger impact on U.S. mobile payments through 2014 than any NFC-enabled attempts," Litan said.

Rick Oglesby, an analyst at Aite Group, said the ISIS decision to delay the rolling out of its NFC approach shows how difficult the process can be.

"Even for ISIS, it's a huge challenge, as we've seen with the delay in launching within two finite geographic areas," he said. "If ISIS is struggling in Salt Lake City and Austin, how could Apple be successful globally?"

 

 

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