Will Apple ever give NFC a chance?

Near Field Communications (NFC) has one again failed to float Apple’s boat with the latest iterations of the iPhone giving it a wide berth, and don’t expect it to make an appearance in the iPhone 6 either.  

The lack of NFC capability on the latest iPhones will grate those who have been pinning their hopes on making payments as simple as waving a phone in front of a reader. For many the inclusion of the technology on the iPhone was seen as the seminal moment needed to take NFC primetime, but Apple isn’t interested and it’s hard to see it change its mind in a hurry.

It’s undoubtedly a blow to wider NFC adoption and Google’s acquisition of Bump Technologies this week shows that even the traditional backers of the technology might be considering their options.

An NFC simulator

Google has spent somewhere between $30 to $60 million to buy Bump, an app that simulates NFC capabilities, its ability to transfer files between devices by tapping them together further enhanced by the fact that it can jump across mobile platforms.

Bump provides a richer, more seamless experience than the NFC capabilities currently available on some Android phones via Android Beam. The problem with Andorid Beam is that it just not as reliable as can be and without wider NFC adoption across the board the overall use case remains limited.

Google may be hoping that some of that Bump magic just might bring NFC-like functionality to a broader Android device range. But it’s too early to tell if this is Google working on improving Android Beam or investing in plan B.

Why Apple isn’t interested in NFC

Those committed to NFC will hope that Google keeps the faith with NFC, because Apple has very deliberately decided to pursue an alternate path, on that pushes the iPhone's AppStore and Passbook for mobile payments.

Apple’s reasoning for its reticence is twofold. Firstly, it finds the overall NFC experience to be a turn off for consumers and even if that problem is solved, integrating NFC into Apple’s unified world view requires a lot of leg work.

Forrester Research’s principal analyst Charles Golvin says that enabling NFC use for payments in the physical world does not benefit Apple, unless it puts in the hard yards with respect to business agreements with retailers.

“At this point they don't believe the potential revenue warrants the necessary investment,” Golvin says.

There’s also another dynamic at play here. Apple is acutely aware that any work it does to improve the NFC ecosystem from a customer experience perspective will be quickly copied and capitalised on by fast-followers like Samsung (Android). Faced with this scenario, Apple is presumably better off pursuing its own solution Passbook, which works through optical scanning of QR codes.

Apple’s decision to include biometrics in the iPhone 5S through Touch ID is another step in Apple’s payments ecosystem and a NFC capability would have been the final piece of the puzzle, especially when it comes to authentication. However, Apple is clearly keen to maintain a physical, touch-based interface in place instead to bumps and beams.

It’s also a sign that when it comes to the NFC versus Bluetooth debate, Apple reckons Bluetooth will come out on top for both pairing and payments. Apple unveiled its AirDrop file-sharing technology in June and that relies on Bluetooth and Wi-Fi, but not NFC.

The authentication opportunity

However, that doesn’t mean Apple hasn’t had a good look at NFC and some analysts like Forrester’s Andras Cser say that the iPhone 5S was an opportunity lost by Apple.

“Without NFC in the iPhone 5s, Apple delayed better fraud prevention and authentication for mobile payments,” Cser says.

“Now that other mainstream mobile phones have an NFC chip, we would have liked to see it built into the iPhone 5s. This would have made NFC-based mobile payments more viable and, via fingerprint authentication, more resilient to fraud, giving Apple a significant competitive advantage in this space.”

Cser adds that Apple has a patent filed a patent for a combo fingerprint reader plus NFC chip, so perhaps it will come in the future.   

It might, especially if the authentication narrative takes hold more strongly in the general public, but Apple seems unconvinced for now.

According to Dr Ronald Klingebiel, assistant professor of strategy at University of Warwick, Apple has a track record of refusing other standards before, such as flash.

He adds that Apple might partly be concerned about the role they stand to play in the NFC value chain.

“It looks as if specialist providers, in consortium with mobile operators and others, have a business model, generating income by taking a minute slice from every transaction. It is unclear where handset makers would come in,” Dr Klingebiel says.

“NFC’s success is not yet a foregone conclusion, and the value chain that delivers it is not yet set in stone, so there is a chance that Apple is making the right choice. It’s a gamble.”

Additional reporting by Krishan Sharma.