How Apple can make big business with NFC on the iPhone 6
Near field communication (NFC) is typically used for mobile payments made by bringing the phone in close proximity (or tapping) the phone to special hardware integrated with a vendor’s payment terminal. It’s been around for a few years starting with Google’s Android. It hasn’t made a big splash, so it’s somewhat surprising that rumors say the next iPhone will have NFC.
Apple would only have NFC on the iPhone 6 if it could make a good business plan for the technology. This would definitely include mobile payments as found on competing phones with Android. Apple would get a small percentage fee per transaction. This is supported by rumors that Apple has been in negotiations with major financial players to support the upcoming NFC payments.
This alone wouldn’t likely get Apple to make the push into NFC, as the technology hasn’t been accepted in a big way by consumers. It’s had a few years head start, but it isn’t a household name nor technology that is used heavily.
What would make a good business case for Apple with NFC is to tightly integrate it with Passbook.
What would make a good business case for Apple with NFC is to tightly integrate it with Passbook. This is the app and service in iOS that groups store loyalty cards with coupons and other retail items to keep them in one place for iPhone and iPad owners.
Passbook uses GPS to notify iDevice owners when they are near a retailer that is represented in Passbook. This could be a big deal with NFC on the iPhone. Apple could make deals with major retailers that includes promotions through the combination of Passbook and Apple’s mobile payments via NFC.
The iPhone owner could be walking in a major retail mall and Passbook would pop up a notification on the phone when a store that the owners patronizes is nearby. This could note a promotion that the retailer is offering a healthy discount on purchases made right now with, and only with, Apple’s NFC mobile payments.
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This would be a highly effective method of promotion for the retailer. It would also work well for Apple, as they could contract getting a percentage of such sales in addition to the normal transaction fee for the payment. The company gets a cut on the sale and another on the payment, and the retailer will see the value in the promotion and be happy to pay it.
Rest assured that if Apple enters the NFC space, the acronym and its full term will never appear in front of iDevice owners. Neither term resonates with consumers today, and Apple won’t use them. Don’t be surprised if Apple reinvents NFC under a cute name like iPay or iTap.
The company will promote the new iPay/ iTap service as a new simple feature of iOS and the new iPhone. This will distance it from the competition, as Apple commonly does. It will be pitched as fresh and new, and a feature of the new iPhone. It will surely be touted as super easy for the iPhone owner.
With NFC on the iPhone, Apple should add benefit beyond mobile payments. It could make noise about one-tap pairing with Beats Audio headphones using iTap. No more going into settings, simply tap the iPhone to the headset. This could also be a feature used with healthcare devices. No complicated connection steps to perform, just a single tap.
I expect Apple will also tap into NFC to make it easy to share stuff with other iDevice owners. This is already being done with NFC on Android, and Apple can promote this “new” easy feature to iPhone owners.
Apple seems to be poised to include NFC on the iPhone 6, and it should tightly integrate it with the iOS Passbook service. It will give the mobile payment feature of NFC a cute name more in line with the iPhone and Apple offerings.
It will be fresh and new according to Apple, and simply another function of the new phone. If Apple approaches this as outlined here, this could be big business for the folks in Cupertino. It will also bring Apple into the retail business outside its normal space.
It is widely expected that Apple will announce an entry into the wearable market. If this happens, expect NFC to play a large role in new devices of this type. In addition to the ecommerce plays mentioned, wearables from Apple should also interact with the new iPhone and perhaps iPads. NFC could be the mechanism for linking wearables to other iDevices.
Expect non-fans of Apple to get vocal with the argument that NFC on the iPhone is nothing new. They will be correct, but odds are as it’s done before, Apple will be the first to make it profitable for all parties. It has the marketing acumen and the receptive audience to make it the next big thing.
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