NFC growth could stall after iPhone 5 snub

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Apple’s NFC snub could slow UK adoption of wireless payment services 

Growth of NFC adoption in the UK could be stalled as a result of Apple’s exclusion of the technology on the iPhone 5.

Apple unveiled its latest handset, the iPhone 5, yesterday evening (September 12) and was widely expected to include NFC technology, which would allow users the ability to make wireless payments for goods.

Despite upgrades to the iPhone 5, including an eight megapixel camera and a dual core processor, NFC, dubbed as ‘the next big thing; in mobile, was not included.

NFC has been predicted to account for more than $50 billion in transactions by 2014, with around 700 million NFC ready devices predicted to be shipped by 2016.

There are 140,000 retail stores across the UK which use NFC ready terminals.

BlackBerry, Samsung, HTC, LG, Nokia, Panasonic, Sony have all included NFC technology in selected handsets within their UK portfolio.

The European head of technology for financial services firm KPMG Tudor Aw fears the speed of adoption of NFC in the UK may now stall as a result – given iPhone users are typically early adopters of new mobile technologies.

“The iPhone 5 has continued Apple’s recent trend of iterative developments of the phone rather than introducing revolutionary new features.  Most of the evolutionary new features such as faster speeds, better camera, bigger screen and new docking cable were widely anticipated and will be welcomed by customers. But it is the lack of a NFC chip to enable mobile payments that is perhaps the biggest surprise and disappointment.”

“Mobile payments have long been touted as the ‘next big thing’ but to date, has simply not happened in any significant way. It had been hoped that Apple would turn its famous ability to deliver new technology through great user experience to kick-start the widespread adoption of mobile payments by consumers. The interesting question is whether this omission will mean further delay in mobile payments taking off or if it presents an opportunity for its competitors to take a lead in this field.”

Comparison site uSwitch telecoms ‘expert’ Ernest Doku  said the lack of NFC as well as the change in charging point, was disappointing, but typical of Apple : “On the downside there was no mention of NFC capability for mobile wallet payments. But Apple typically leaves them wanting more.”

Digital banking solutions Intelligent Environments VP Mobile James Richards however, was not surprised by Apple’s decision due to the slow deployment of NFC services in the UK.

“Contrary to widespread industry speculation, it’s no surprise that Apple made the decision not to include NFC in the iPhone 5. The reality is that we’re still 2-3 years away from mass adoption of mobile payments, and with so many companies jostling for attention in this space it’s likely Apple will wait another 12 months before including NFC in iPhone technology. The roll-out of an NFC offering for such a massive institution is a huge step, and needs to be integrated with existing offerings effectively.”

“Of course, Apple is already making a stance in the world of mobile wallets. The Passbook capability in iOS6 is clearly a useful wallet container for storing tickets, coupons, and offers, and it’s highly possible that for the time being this is where Apple’s payments investment will be concentrated. With 400 million iTunes account holders, Apple has access to a massive audience to leverage for payments services, but the challenge will be taking this beyond a closed-loop mechanism to a truly useful, customer-centric tool. If Apple can solve this puzzle with the levels of innovation we have come to expect from them, it’s entirely feasible to see how consumers can use their iTunes account to pay for everyday goods and services beyond today’s media purchases – this would be a true game changer for consumer payments.”

“In six months time it will be telling to review sales of the iPhone 5 versus Samsung and Nokia’s NFC enabled phones. This will show whether consumers are ready to favour the convenience and practicalities of paying for goods with their mobile phone, or in fact, they are loyal to the Apple brand and a great looking phone with the widest range of apps.”

 

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