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NFC could debut in next iPhone, even as Google pulls back

Matt Hamblen | Aug. 15, 2013
Mobile payments based on NFC chips inside smartphones have faced slow growth in the U.S., but some analysts predict that the upcoming iPhone 5S expected in September will include NFC technology after years of restraint by Apple.

However, two other analysts contacted by Computerworld said they have doubts that Apple will put NFC in the next iPhone.

"NFC is not that important to Apple, as they have other proprietary payment options," said Jack Gold, an analyst at J. Gold Associates. "NFC is not taking off very quickly, so there is no real pressure on Apple to include this functionality, at least in this round of products."

Apple is also widely expected to include a fingerprint reader chip in the next iPhone, which could be used to complement NFC for security. Or, Apple could focus on the fingerprint chip and leave out NFC, Gold said.

Patrick Moorhead, an analyst at Moor Insights & Strategy was more emphatic in his prediction there won't be NFC in either the expected iPhone 5S or the iPhone 5C. "I don't expect the 5S or 5C to have NFC because I don't think Apple knows how to control it or make money on it," Moorhead said. "There's an outside chance the 5S would have it, at least for Apple to say they have it."

Yankee Group forecasts NFC-based transactions in the U.S. will grow from $166 million in 2013 to $2.3 billion in 2017, aided by merchants moving to NFC-ready payment terminals inside stores. That's still just a fraction of the global NFC payments for 2013 of $60 billion that Yankee Group has projected.

A turning point in the U.S. toward NFC will come in October 2015, when merchants must either upgrade their terminals to accept what's known as the EMV (Europay, MasterCard, Visa) smart chip card or accept liability for any fraudulent transactions that occur at terminals that are not upgraded, Yankee Group said. Those EMV terminals will accept most if not all NFC payments, McKee said.

"NFC at the point of sale is stagnant for now in the U.S. and will remain that way until EMV terminals arrive," McKee said "Right now, one of the biggest roadblocks is merchant acceptance."

McKee said it is unclear how successful Isis will be with a national rollout this year, partly because its results from trials in Salt Lake City and Austin haven't included many details. While Isis confirmed it has 4,000 retailers supporting Isis in those two cities, it has never disclosed how many actual customers are using Isis-ready smartphones to make NFC transactions at those merchants, he noted.


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