The next iPad and iPhone could contain a special chip to facilitate secure wireless payments on the go, turning your handset and tablet into a mobile payment terminal that you’ll just swipe to pay for goods and services.
This information came in a Bloomberg interview with Envisioneering Group’s director Richard Doherty who re-iterated a long-standing rumor that Apple’s engineer want to put a NFC chip inside the next iPhone and iPad hardware.
The hardware and the accompanying iTunes service said to include loyalty rewards and credits could be ready for a summer introduction, Doherty said.
A couple of patent filings from Apple also indicate that the company could be at least considering such a possibility. NFC, which stands for Near-Field Communication, is a technology conceived to facilitate secure over-the-air transactions at up to four inches (about ten centimeters) distance.
It requires an enabled device with an embedded NFC chip and a terminal that transmits and receives data from nearby devices and settles payments in a secure manner with a user’s bank. Most NFC terminals are also being compatible with existing contactless infrastructure, which allows them to communicate with both existing ISO/IEC 14443 smartcards/readers and other NFC devices.
Bloomberg explains Apple already has a prototype terminal and is shopping it around:
Apple has created a prototype of a payment terminal that small businesses, such as hairdressers and mom-and-pop stores, could use to scan NFC-enabled iPhones and iPads, Doherty said.
The company is considering heavily subsidizing the terminal, or even giving it away to retailers, to encourage fast, nationwide adoption of NFC technology and rev up sales of NFC-enabled iPhones and iPads, he said.
Of course, Apple’s not alone in this undertaking. Several existing and a number of upcoming Android superphones already sport NFC chips and software support for mobile payments, including the Nexus S.
Apple’s advantage is its existing iTunes ecosystem with nearly 200 million accounts with credit cards on file enabled for one-click purchasing. On the other hand, some watchers think it’ll take Apple’s brand and marketing muscle to take wireless payments outside the tech-inclined crowd and into mainstream.
A theoretical combination of an NFC-enabled, next-gen iPhone or iPad hardware paired with a dedicated app that talks to the iTunes cloud and is tied to a user’s iTunes Store account could be Apple’s big differentiating factor.
Picture this: You waltz inside your local groceries store to buy some food and pay simply by launching Apple’s app on your handset to approve the transaction and voila – Apple charges your credit card on file with the iTunes Store, deducts a desired amount from your iTunes Store Gift Card balance or settles the bill directly with your bank.
Of course, this relatively new technology has yet to catch on with consumers, even though big credit card issuers like MasterCard are already running NFS payment trials.
Third-parties like DeviceFidelity are also jumping on the bandwagon with own solutions.
Last year, DeviceFidelity released the In2Pay NFC MicroSD, pictured on the right, basically a special iPhone case with an USB port allowing you to insert a standard In2Pay MicroSD card into the case in order to make wireless payments with your handset.
Apple approved the accessory that was developed in collaboration with Visa. Another is Square, a startup by Twitter’s founder Jack Dorsey that sells attachments that turn your cellphone into a mobile payment.
The Square attachment plugs directly into the top of you iPhone and lets you swipe credit cards to accept payments, as seen in the below demonstration by Kevin Rose.