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Apple set to disrupt mobile payments industry

By Jay Highley

With all the speculation and buzz going into hyper-drive about the fourth generation of Apple’s game-changing iPhone, one rumored enhancement that many thought would debut was embedded Near Field Communications (NFC) capability.

It now appears that NFC will most likely not be supported in Apple’s next version – which represents a big disappointment for the NFC community that has been waiting in earnest for a leader in the mobile device community to step forward and mainstream this technology.

Based on Apple’s numerous patent filings around NFC applications in the last several months, the mobile commerce industry was expecting Apple to be this leader and once again play the game-changer role that it has done so effectively in the past.

Payoffs and payouts
Since Apple is already in the midst of disrupting the mobile advertising ecosystem through its acquisition of Quattro Wireless, the screaming success of the iPad and the launch of the iAd platform, it seemed quite likely that the company would be the one to throw a monkey wrench into the stodgy retail payment and transaction world, too.

While the wireless carriers, credit card and payment transaction companies sit around and pontificate about who is going to be the king of the “mobile wallet,” Apple appears to be building a better mouse trap that just might put all of their self-interests and ideas into a tailspin.

But, then again, Apple CEO Steve Jobs has never been one to play by anyone else’s rules and his ability to tie multiple elements of functionality together into one seamless user experience has already been proven countless times to be purely genius.

Coupling the steady stream of Apple’s patent applications in recent months with rumors of Apple executives asking a lot of questions at recent NFC conferences could lead one to the likely conclusion that Apple was preparing to embed

NFC radio technology into its newest iPhone — thus centering that phone at the hub of the retail payment experience, event ticketing and peer-to-peer funds transfers.

Carving out this space would allow Apple to disrupt the entire payment industry and allow the iPhone to become the mobile wallet that industry analysts and experts have been talking about for the last 10 years.

Apple’s patent filings describe functionality that allows iPhone users to not only make payments for products and services from their iPhone, but also includes the functionality for mobile couponing, funds transfers and interactive posters.

Imagine being able to load cash credits on to your iTunes-like account and pay for your next burger or concert ticket with simply a few taps on your iPhone.

While this concept is both convenient and compelling for many consumers, it should be even more attractive if accompanied with Apple’s magical “ease of use” and the trusted credibility of the Apple brand.

Middle road, not middlemen
Once fully deployed, Apple will have successfully made the NFC-capable iPhone a conduit for billions of dollars of monetary transactions and virtually cut out several layers of middlemen in one fell swoop. It will also give millions of mobile subscribers just one more great reason to switch to an iPhone.

At the end of the day, Apple sells more iPhones and also places itself squarely in the middle of the mobile payment and mobile transaction value chain – brilliant.

It remains to be seen whether the upcoming fourth-generation iPhone has embedded NFC functionality when it comes out in June. However, it is clear that Apple is poised to become the game changer in mobile payment and mobile transactions. Anyone who bets against that has been living in a cave.

Jay Highley is founder president of Pangea Partners, Indianapolis, IN. Reach him at [email protected]