For some time it has been debated whether Apple would embrace Near Field Communication (NFC) technology as part of its offering for payments, loyalty and connecting devices, and this has once again been brought to the media's attention. Recently, KGI Securities analyst Ming Chi Kuo, who has a habit of getting Apple predictions right, said that NFC will be in future iWatch and iPhone devices. So, in conjunction with the patent Apple filed for in January, which would enable iPhone users to combine NFC with Bluetooth and WiFi to complete transactions and return coupons to a customer's device, it is fair to say that it is likely that NFC will be deployed by Apple.
For some, Apple's decision to delay including NFC capabilities into its devices has been seen as a threat to the success of the technology; however, I would disagree for two main reasons. One, NFC is already a standard feature on Android, Windows & Blackberry devices, as well as almost all new non-iOS smartphones. Secondly, mobile chip giants such as Broadcom, are starting to include NFC in the same chips that deliver GPS, 3G and 4G, so as the market moves ahead, Apple won't be able to buy chips without NFC functionality inside. To avoid NFC, Apple would have to actively elect not to enable it on its devices, despite the chips having the capability.
The only plausible reason for Apple delaying NFC compatibility would be because it wants to create its own ecosystem using the technology, rather than just including it as an added extra for their users. An obvious way Apple could do this would be to use NFC as a connective technology across its devices, so that information can be exchanged between them. FitBit wristbands, for example, already include NFC to conveniently trigger the app on Android phones so that information can be combined with other tracking systems, allowing users to store all their fitness data in one place.
Personally, I'd be surprised if Apple didn't take advantage of the payment capabilities of iTunes, as it has millions of users' card details stored in its accounts. By doing this, Apple could use NFC to enable contactless payments in physical stores. However, this would require Apple to work closely with card schemes that set the rules for acceptance of cards and certification of phones, which support NFC payments. These additional requirements could slow down Apple's speed of innovation and potentially go against the company's typical secrecy on new products.
Despite Apple's delay in embracing NFC, it's already proving to be a success for contactless payment initiatives such as contactless cards. In the UK alone, there were 30.3m contactless Visa bank cards at the start of 2014 and this number is growing. As for transactions, this increased by four times from 2012 to 2013, with £461.6 million spent on Visa contactless cards last year, and Canada, Europe, Australia and Asia all observing similar growth. However, in Apple's largest market, the US, NFC payment adoption has been slow, meaning there is less local pressure to include the feature.
What we need to remember is that NFC can do a lot more than payments. These other uses could be highly valuable to Apple, in say, extending its existing Passbook functionality to support contactless ticketing and access control beyond visual barcodes alone. It is also great for close proximity opt-in marketing. As consumer engagement grows, a large number of existing retailer and brand Apps will be able to take advantage of new interaction capabilities, such as in-store customer loyalty programmes, vouchers and competitions. NFC technology has already proven to offer a great opportunity for retailers, advertisers and marketers to interact with consumers; all we need now is for more devices to adopt it and greater consumer understanding of how it benefits them. This will no doubt increase when Apple supports the capability.
Neil Garner is CEO of Proxama, a mobile marketing company.