Apple is expected to install “wave and pay” technology for the next version of its iPhone, boosting mobile commerce and potentially giving the company a big piece of the multibillion-dollar transaction industry.
The iPhone 5, due out this year, is likely to incorporate technology called Near-Field Communication, which incorporates financial account information and ties that data to specific devices, according to Asian suppliers and others who have been in talks with Apple.
“I do believe the iPhone 5 will have NFC embedded,” said Bill Gajda, Visa’s head of mobile innovation, one of those in discussions with Apple.
Apple declined to comment.
Samsung and other handset makers who use Google’s Android smartphone software are already putting NFC in new models, and Research in Motion and Nokia are embracing the technology as well.
NFC works at a range of four to five inches via point of sale scanners and is considered more secure than RFID and other touchless technologies.
Apple could bring the system to a broad audience rapidly by putting it in all versions of its phones. Owners of iPhones are typically heavy users of data and their upscale demographic makes them a desired target for businesses.
Apple also brings to the table credit card numbers it has on file for more than 100m users of iTunes, the digital storefront for entertainment and software downloads. That could give it the leverage to extract better terms from card issuers, who typically tack on fees of roughly 2 per cent to retailers who accept their systems.
Apple could also decide to go it alone, keeping transactions in-house, said Richard Doherty, an engineering consultant who has spoken with Asian equipment suppliers bidding for inclusion in the next iPhone.
Mr Gajda said he hoped that Apple would adopt an “open” strategy that would allow consumers to decide which accounts to tie to their phone.
Large retailers who do not yet have NFC scanners would have to spend heavily to switch to new terminals, Mr Doherty warned, though it would be easy for smaller outlets that rent such terminals to start leasing NFC-capable machines instead.
US wave and pay trials have, thus far, been small. Visa has been working with some cardissuing banks, for example, who mail small cards with financial credentials that can be inserted into the iPhone and other smartphones.