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iPhone 5: Lack of NFC is Detrimental to Mobile Payments

Source: Tech Radar

By Daryl Colwell | @DHColwell | VP, Business Development

Yesterday’s launch of the iPhone 5 was a bit anticlimactic. Brands, marketers and tech pundits were expecting something “magical” in the words of the late Apple founder Steve Jobs. What they saw, however, was more of an incremental improvement to the iPhone – a larger screen, lighter weight, the new Passbook mobile coupon system and the confirmation that the iPhone 5 will run on 4G LTE networks.

But sorely missing from the iPhone 5 is the implementation of Near Field Communications (NFC), the technology that powers mobile payments and the nascent mobile wallet.

As I have written before, it is imperative that the major mobile phone developers make a significant commitment and push to introducing NFC and mobile payment capabilities in new smartphone models. This is especially true of Apple, which is seen as the market leader in innovation.

The fact that the iPhone 5 — a sure success — does not include NFC capabilities places a significant damper on the growing mobile payments industry and the future of the mobile wallet. 

Brands and advertisers were buoyed a few weeks ago by news of Starbucks’ $25 million investment in Square, a mobile payments platform that allows merchants to take credit cards via their smartphones. The future of the mobile wallet got another boost recently when several major brands banded together to create the Merchant Customer Exchange.

Given that the iPhone has only 16.9% of worldwide smartphone market share, according to IDC, the announcement of a new iPhone without NFC capabilities is unlikely to dissuade anyone from purchasing it. But it does hinder growth of the nascent mobile payments space, which needs more major smartphone makers to develop easy-to-use technology that delivers a real value to merchants and consumers, such as Google has done with its Google Wallet.

The bigger effect will be on merchants spending good R&D money towards accepting mobile payments.

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