iPhone and payments – same time, same old question …

Originally posted on Billing Views.

For the third year year running the tech press has been debating whether or not the new iPhone will have an NFC chip and will Apple launch an NFC based payments service. This year leaked parts from the new iPhone appear to confirm that an NFC chip is definitely present and speculation has focussed on what exactly Apple will do with payments, especially as the word is that Apple has signed agreements with Visa, MasterCard and American Express.

Despite all the theories and rumours no one has any idea what Apple’s plans are and whether they will utilise iTunes accounts, other cards, Touch ID, Passbook, NFC, Bluetooth LE or something else. The most likely scenario appears to be a digital wallet unlocked via Touch ID that will allow NFC contactless payments to be made and charged to an existing card.

However, if Apple is going to be successful in payments they have to launch a payments service that is not just better than existing payment methods but much better. Taking friction and frustration out of the payment process is the key challenge for Apple here.

Simply replacing a contactless card with a NFC phone is limited progress at best and in some respects less convenient than a simple card. Apple’s history of taking something and doing it better suggests that their payment model will do more than this and include functionality that will capture the consumer imagination.

How will Apple make money in a commoditised business where margins are thin? Maybe they don’t plan to and payments is just another way of making your iPhone even more indispensable.

But all this is just speculation and we will have to wait until 9 September to find out more …