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Apple reportedly playing waiting game with mobile-payment initiative

post #1 of 54
Thread Starter 
As a growing number of handset makers incorporate mobile payment systems in their smartphones a new report details why Apple has been seemingly reticent to enter the market and says that company executives have chosen the "go-slow" approach instead of rushing headlong into the sector.

A report from The Wall Street Journal explains that Apple is deliberately holding back in the mobile payment arena as a result of "deep discussions" last year.

At WWDC in June Apple announced the new Passport app which is seen as the iPhone maker's foray into the world of mobile payments and will be included in iOS 6 later this year. The system is far removed from offerings like Google Wallet's near-field communications solution and Microsoft's upcoming system that stores credit card and "other mobile-payment" information that can be accessed directly by a merchant.

While competitors are jumping head-first into mobile payments, Apple looks to be merely testing the waters with Passbook, an app that only stores digital versions of loyalty cards, boarding passes, tickets and the like. The app doesn't have credit-card information storage, nor is the next-generation iPhone expected to sport NFC but that is apparently the point.

Apple senior vice president of worldwide marketing Phil Schiller said that other digital-wallet services are "all fighting over their piece of the pie, and we aren't doing that."

Passbook App
Apple's upcoming Passbook app will be included in iOS 6. | Source: Apple


Piper Jaffray analyst Gene Munster contends that Apple is strategically waiting until the market is no longer nascent and can learn from the competition's mistakes. "Apple is always a comfortable number two," Munster said. "They let their competitors do their market research for them."

Apple is actively studying its options, however, and sources close to the matter said iPhone software chief Scott Forstall was interested in the idea of a comprehensive "wallet app" as early as last year. Forstall reportedly put a team together to work out the feasibility of offering direct payment functionality but the idea was scrapped on account of its complexity and the possibility that the company would in some ways need to become a bank.

Instead of a full-fledged "wallet app" engineers decided on the Passbook software which could allow the company to be cut-in on each payment made through the service, a well-worn strategy already implemented in iTunes. This idea too was pared down during an executive review of the overall system in 2012, said a source briefed on the meeting.

Chief Financial Officer Peter Oppenheimer reportedly had concerns about information security while Schiller was worried that poor customer service from merchants might reflect badly on Apple. Thus the ultimate app agreed upon was limited to inessential financial assets.

The story isn't over for Apple's "wallet app," however, as it is unlikely the company can ignore the mobile-payment market for long. According to research firm Gartner, the sector is expected to grow from $172 billion worldwide in 2012 to over $600 billion by 2016.
post #2 of 54

Not surprising.

 

Apple has typically been relatively conservative in picking cellular technologies for its handsets, typically waiting for a given cellular network technology to be well deployed on a worldwide basis before implementing it in their handset. In the last iteration, the iPhone 4S stuck to well-proven HSPA+ technology rather than try to implement LTE (which would have been problematic concerning battery life issues).

 

For something like NFC contactless payments, there really needs to be a well-implemented worldwide standard before it makes sense to roll out on a handset that is marketed worldwide.

 

Today, there are too many corporations competing to push their own proprietary NFC "solutions". No one can apparently recreate what happened in Japan and South Korea, so consumers are stuck on the sidelines watching a parade of NFC peddlers walk by.

 

American Express has sunk millions into failed smart card initiatives including their long-defunct smart-chip equipped cards (I had one of those Blue Readers) and the more recently cancelled NFC-chipped cards. My old American Express Blue card had the NFC chip, the most recently issued card does not. Both of my Chase cards have the PayPass NFC chip, and I've seen plenty of PayPass card terminals in stores, etc., but I've never seen anyone use one.

post #3 of 54
Quote:
Originally Posted by cvaldes1831 View Post

Not surprising.

Apple has typically been relatively conservative in picking cellular technologies for its handsets, typically waiting for a given cellular network technology to be well deployed on a worldwide basis before implementing it in their handset. In the last iteration, the iPhone 4S stuck to well-proven HSPA+ technology rather than try to implement LTE (which would have been problematic concerning battery life issues).

For something like NFC contactless payments, there really needs to be a well-implemented worldwide standard before it makes sense to roll out on a handset that is marketed worldwide.

Today, there are too many corporations competing to push their own proprietary NFC "solutions". No one can apparently recreate what happened in Japan and South Korea, so consumers are stuck on the sidelines watching a parade of NFC peddlers walk by.

American Express has sunk millions into failed smart card initiatives including their long-defunct smart-chip equipped cards (I had one of those Blue Readers) and the more recently cancelled NFC-chipped cards. My old American Express Blue card had the NFC chip, the most recently issued card does not. Both of my Chase cards have the PayPass NFC chip, and I've seen plenty of PayPass card terminals in stores, etc., but I've never seen anyone use one.

MasterCard already stated that a company like Apple needs to be behind the shift to NFC. I wonder if that is some foreshadowing. I can see Apple using the hundreds of millions of CCs on file to use as a middle man for all these payments through MC, Visa, and AmEx.

They don't have to make a major profit on the transactions. It can be like their other services where it's just a way to sell more HW so their goal is to pretty much break even. That makes me wonder if something like 0.025% per transaction would be more than sufficient to cover their expenses... and then some.

For those that have used their Apple Store app to scan and buy a product without assistance from an Apple Store employee you already know they allow for atypical product sales from your phone via the CC on file with your iTS account. This is alright but it's only part of the process, like with PassPort. NFC (or something like it) is the only way to move this to the next level of usability and security.

As for first being well-implemented, that's a chicken and egg problem. How did we ever get credit cards, ATM and debit cards in circulation? They are all before my time but i assume it was like most other culture changing conveniences where you have the old and new way being used concurrently until the new way is so popular, well vetted and ubiquitous (for a given area) that the old way just gets forgotten or is kept as a "just in case" backup. Even now we still use cash even though it's a very insecure method of transferring funds.


So NFC coming this year to the 2012 iPhone (can't call it the 6th release of the iPhone without feeling Melgross's wrath).
Edited by SolipsismX - 7/6/12 at 5:20pm

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post #4 of 54

Go slow? More like going nowhere. It seems like we've been waiting forever for NFC technology to go mainstream. They've been doing this in Japan for many years.

post #5 of 54

I hope that Apple comes up with a more intelligent solution than the current crop of NFC offerings. What I see today in payment technology is actually retrograde. It may be more secure to use a chipped CC but it is also slower and less convenient than the older swipe and sign. The thought of an NFC system that requires me to take my iPhone out of my pocket, out of its protective case and then tap it on a terminal after having stood in line to get there does not strike me as progress. A recent article suggested that Apple would implement payment via Bluetooth which would allow me to pay from anywhere in the store without approaching a terminal made a lot more sense to me.

post #6 of 54
Quote:
Originally Posted by Shaun, UK View Post

Go slow? More like going nowhere. It seems like we've been waiting forever for NFC technology to go mainstream. They've been doing this in Japan for many years.

That means nothing on so many levels.

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post #7 of 54
Quote:
Originally Posted by SolipsismX View Post


That means nothing on so many levels.

 

How so?

post #8 of 54
Quote:
Originally Posted by cvaldes1831 View Post

 Both of my Chase cards have the PayPass NFC chip, and I've seen plenty of PayPass card terminals in stores, etc., but I've never seen anyone use one.

I use mine everyday.

post #9 of 54
Quote:
Originally Posted by genovelle View Post

I use mine everyday.

Is that NFC? I thought those were RFId sans NFC.

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post #10 of 54
Quote:
Originally Posted by uhrgenau View Post

A recent article suggested that Apple would implement payment via Bluetooth which would allow me to pay from anywhere in the store without approaching a terminal made a lot more sense to me.

 

Not sure how that would work. You would still need to go to a recognisable "payment point" in most stores to pack the goods and pay. I know you can do something like this in the AppleStore but you still have to find a sales rep, ask them to go get your goods and put them in a bag before you walk out. I don't see how that's much different from simply going the payment point.

post #11 of 54

Apple better not wait too long. Do they want to be a leader or follower? Microsoft phones will have NFC later this year. However, I believe it should a world standard.

post #12 of 54
Quote:
Originally Posted by Shaun, UK View Post

Go slow? More like going nowhere. It seems like we've been waiting forever for NFC technology to go mainstream. They've been doing this in Japan for many years.

This is one of the biggest misconceptions and claims about Japan. Don't know your experiences, but I've been to Japan twice and in my travels I've yet to see anyone using this to pay for anything. All my friends and people I've seen in stores all reach into their wallet/purse just like we do. Not saying no one uses it, but I've been to a handful of cities there and no one I've seen does this. But their train system is truly amazing, food is great and the women are beautiful. 1smile.gif
Edited by mesomorphicman - 7/6/12 at 7:50pm
post #13 of 54
Quote:
Originally Posted by mike54 View Post

Apple better not wait too long. Do they want to be a leader or follower? Microsoft phones will have NFC later this year. However, I believe it should a world standard.

 

Again, the problem is that there is no agreed-upon standard amongst merchants, payment processors, etc. unless you live in certain southeast Asian countries (Japan and South Korea are notable).

 

The technology isn't an issue, it's an implementation or acceptance problem. In the same way, HD DVD died because the market acceptance went to Blu-ray. Same with Beta versus VHS. GSM versus Nextel's iDEN service.

 

Each of the major credit card companies has their own wireless payment technology: Mastercard PayPass, Visa payWave, American Express ExpressPay, etc.

 

Microsoft will be implementing some kind of NFC, but there's no guarantee that whatever horse they are backing will win the race. Remember that Microsoft bet on HD DVD, the industry alliance that ultimately lost.

post #14 of 54
Quote:
Originally Posted by mesomorphicman View Post


This is one of the biggest misconceptions and claims about Japan. Don't know your experiences, but I've been to Japan twice and in my travels I've yet to see anyone using this to pay for anything. All my friends and people I've seen in stores all reach into their wallet/purse just like we do. Not saying no one uses it, bit I've been to a handful of cities there and no one I've seen does this. But their train system is truly amazing, food is great and the women are beautiful. :-)

 

Interesting. I thought it was more widespread than that simply from what I've read over the years but as I've never been to Japan I don't honestly know. Thanks for the insight. You learn something new every day. I would love to go to Japan one day. A whole department store with just tech goods - how good must that be. Can't comment on the food and trains but I agree with you about the beautiful women. 

post #15 of 54
Quote:
Originally Posted by Shaun, UK View Post

How so?

I have to be brief but there should be plenty of keywords to google. Japan is a much smaller country than the US so certain technologies will be tried and adopted faster in certain cultural structures. 10 to 1 population density can do that. What you are calling NFC is Japan's FeliCa which is more advanced than RFID and has a direct lineage of modern, ratified NFC but it's not the same thing as NFC-A or NFC-B. You might best call modern NFC the lovechild of RFID and FeliCa. Finally, it's been less than a decade since FeliCa launched and much less than that since it really caught on in certain areas. It's certainly not as common or more common than swiping a card still is.

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post #16 of 54
Quote:
Originally Posted by mike54 View Post

Apple better not wait too long. Do they want to be a leader or follower? Microsoft phones will have NFC later this year. However, I believe it should a world standard.

 

Apple are generally not leaders anyway, and that's a good thing when it comes to doing things properly.

 

They didn't have the first mobile phone, or tablet, and look how those markets have turned out for them.

 

If MIcrosoft gets in first, then they'll just help to bring in a standard. That's good, not bad, for Apple.

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post #17 of 54
Quote:
Originally Posted by mike54 View Post

Apple better not wait too long. Do they want to be a leader or follower? Microsoft phones will have NFC later this year. However, I believe it should a world standard.

 

Oh please. Microsoft? The company that made a name for itself rushing version 1.0 to market and takes 3 versions to get anything right?

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post #18 of 54

Apple is apparently  waiting for something to go into NFC, I have no idea what Apple is waiting for, but doing it right is more important. So lets give Apple credibility on waiting for the time to be right,

post #19 of 54

The passbook app in the iOS 6 beta tells you all you need to know.  How hard would it be to add master card,visa, paypal etc. to it?  Not hard at all.  But these apps will not be available until the RFID chip is in the next iphone, and Apple certainly won't be letting the cat of the bag before then.  

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post #20 of 54
Quote:
Originally Posted by Suddenly Newton View Post

 

Oh please. Microsoft? The company that made a name for itself rushing version 1.0 to market and takes 3 versions to get anything right?

 

They only take three versions because anything needs to pass through the three layers of developers...

 

steve-balmer-developers-developers-developers.jpg

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post #21 of 54

I think Apple wants to turn things upside down. Literally.

 

Instead of having a POS terminal in the store that gets CC data from your smartphone and processes the payments, I think Apple wants to turn your iPhone into the POS terminal itself.

 

Right now the company providing the POS terminal makes a processing fee on every transaction. They also handle the details about transferring funds to the merchant bank account from the customers credit card (or debit card).

 

I think Apple wants to bypass the POS terminal provider entirely and do all the payment processing themselves, including getting a fee on each transaction. Apple would use your CC's on file in iTunes to process payments, or your iTunes account balance for those who use gift cards. There would be no CC information stored on your iPhone.

 

I can't see Apple working with an existing processor (like Moneris) and trying to negotiate who gets what percentage of the processing fees. Apple isn't going to want to do this for free and Moneris isn't going to want to lower their fees simply because Apple wants to "join the game".

post #22 of 54

I simply don't see how NFC can work ATM. 

post #23 of 54
Quote:
Originally Posted by AdonisSMU View Post

I simply don't see how NFC can work ATM. 

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post #24 of 54
Quote:
Originally Posted by EricTheHalfBee View Post

I think Apple wants to turn things upside down. Literally.

 

Instead of having a POS terminal in the store that gets CC data from your smartphone and processes the payments, I think Apple wants to turn your iPhone into the POS terminal itself.

 

I think Apple wants to bypass the POS terminal provider entirely and do all the payment processing themselves, including getting a fee on each transaction. Apple would use your CC's on file in iTunes to process payments, or your iTunes account balance for those who use gift cards. There would be no CC information stored on your iPhone.

 

 

That is to say you're suggesting Apple uses iTunes accounts to become a rival to Paypal, nothing new.

 

What you're suggesting can be just as easily accomplished now with Paypal.

post #25 of 54
Quote:
Originally Posted by Shaun, UK View Post

Go slow? More like going nowhere. It seems like we've been waiting forever for NFC technology to go mainstream.

 

Seeing that you're from the UK, I hope you're doing your bit to push NFC payment technology by using a contactless payment card.

post #26 of 54

I will be disappointed if the next iPhone doesn't have NFC, especially when Apple hired an NFC expert in 2010:

http://www.appleinsider.com/articles/10/08/16/latest_apple_hire_could_signal_nfc_capabilities_in_future_iphones.html

 

For someone in the UK without access to any LTE network, I can't see how the next iPhone will be a compelling upgrade from a 4S without NFC, unless it had longer battery life, optical zoom or maybe the bigger screen some people hanker for.

post #27 of 54
Quote:
Originally Posted by mesomorphicman View Post

This is one of the biggest misconceptions and claims about Japan. Don't know your experiences, but I've been to Japan twice and in my travels I've yet to see anyone using this to pay for anything. All my friends and people I've seen in stores all reach into their wallet/purse just like we do. Not saying no one uses it, but I've been to a handful of cities there and no one I've seen does this. But their train system is truly amazing, food is great and the women are beautiful. 1smile.gif

Did you pay attention when you entered those train stations? Half the riders swipe their rail passes, but the other half swipe their phones. Same goes for most vending machines.
post #28 of 54
Quote:
Originally Posted by cvaldes1831 View Post


American Express has sunk millions into failed smart card initiatives including their long-defunct smart-chip equipped cards (I had one of those Blue Readers) and the more recently cancelled NFC-chipped cards. My old American Express Blue card had the NFC chip, the most recently issued card does not. Both of my Chase cards have the PayPass NFC chip, and I've seen plenty of PayPass card terminals in stores, etc., but I've never seen anyone use one.

Unless this is a very recent change (within last two months), American Express has not cancelled their NFC program. I also received my replacement Blue cards at the beginning of May without the embedded chip; however, all it took was a five minute phone call and I had replacements with the chips included in about a week.
post #29 of 54
Quote:
Originally Posted by EricTheHalfBee View Post

I think Apple wants to turn things upside down. Literally.

 

Instead of having a POS terminal in the store that gets CC data from your smartphone and processes the payments, I think Apple wants to turn your iPhone into the POS terminal itself.

 

Right now the company providing the POS terminal makes a processing fee on every transaction. They also handle the details about transferring funds to the merchant bank account from the customers credit card (or debit card).

 

I think Apple wants to bypass the POS terminal provider entirely and do all the payment processing themselves, including getting a fee on each transaction. Apple would use your CC's on file in iTunes to process payments, or your iTunes account balance for those who use gift cards. There would be no CC information stored on your iPhone.

 

I can't see Apple working with an existing processor (like Moneris) and trying to negotiate who gets what percentage of the processing fees. Apple isn't going to want to do this for free and Moneris isn't going to want to lower their fees simply because Apple wants to "join the game".

On another site that only posts from "9 to 5" they believe it's carrier's resistance more than Apple taking it slow. 

 

Verizon, AT&T and T-Mobile are part of a separate, competing wallet system called Isis that has yet to get off the ground. But that hasn’t stopped the three telcos from colluding to stop competition, however.

Even though Google Wallet is over a year old, it has yet to get on any of these three carriers’ devices. In fact, to get it on AT&T and T-Mobile, Google has to sell the Galaxy Nexus unsubsidized without any T-Mobile or AT&T branding. T-Mobile and AT&T refuse to subsidize the Galaxy Nexus so long that it has Google Wallet (they do subsidize the Nexus S so long as Wallet isn’t added).  On the Verizon version of the Galaxy Nexus, the Google Wallet app is blocked. Sprint is the only carrier that allows Google Wallet – but as a partner with Google, it would be just as unlikely to allow an Apple mobile wallet as ‘Team Isis” above.

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post #30 of 54
Quote:
Originally Posted by Gatorguy View Post

On another site that only posts from "9 to 5" they believe it's carrier's resistance more than Apple taking it slow. 

Verizon, AT&T and T-Mobile are part of a separate, competing wallet system called Isis that has yet to get off the ground. But that hasn’t stopped the three telcos from colluding to stop competition, however.



Even though Google Wallet is over a year old, it has yet to get on any of these three carriers’ devices. In fact, to get it on AT&T and T-Mobile, Google has to sell the Galaxy Nexus unsubsidized without any T-Mobile or AT&T branding. T-Mobile and AT&T refuse to subsidize the Galaxy Nexus so long that it has Google Wallet (they do subsidize the Nexus S so long as Wallet isn’t added).  On the Verizon version of the Galaxy Nexus, the Google Wallet app is blocked. Sprint is the only carrier that allows Google Wallet – but as a partner with Google, it would be just as unlikely to allow an Apple mobile wallet as ‘Team Isis” above.



It's a mess. Besides Google Wallet being out for over a year and Google pushing it with some free money it doesn't look like it's taking off. But even before Google Wallet there was NFC is some Android-based phones yet without any built-in SW to make it work.

I can't imagine Apple ever doing that unless it's secretly adding some HW that will only announce and enable at a later time when it can actually be functional. If the next iPhone has NFC — which I'm hopeful it will — I imagine they will have a complete system setup which includes partners.

Passbook has the advantage of not needing to have the user fumble through pages of apps or even for the Passbook app. You enter a store and that will appear on your phone, hopefully, making it as fast to make a purchase as swiping a card.

On benefit to Google et al. is that this is Apple's wheelhouse. They have 400(?) million CCs on file and the one of the most successful if the most successful cloud-based transaction systems across a half-billion+(?) devices. If Apple gets this right they will be showing others how to do it. There is nothing wrong with a competing service so long as the same NFC-A or NFC-B HW is used at different locations. MC doesn't have to die for Visa to survive.

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post #31 of 54
The Telcos might be giving Google Wallet a hard time, but I don't think they'll be able to push Apple around so easily. The thought of losing their #1 selling device over an unproven new service won't sit well, IMO. It would be different if the Telcos already had a successful system in place.

Apple will do what they always do - look at what others are doing wrong and then come up with a polished product. They don't mind waiting and watching everyone else struggling.
post #32 of 54
Quote:
Originally Posted by ChiA View Post


That is to say you're suggesting Apple uses iTunes accounts to become a rival to Paypal, nothing new.

What you're suggesting can be just as easily accomplished now with Paypal.

Except for one key difference. Paypals POS system works with existing POS terminals. You enter Paypal account info (or swipe their card) and the terminal handles the transaction. PayPal is acting like a CC compasny in that regard.

My suggestion is Apple wants to do away with having to work with someone else's POS terminal and have your iPhone become the terminal itself. I think they want to compete with Moneris, Verifone and others, not compete with Paypal, Visa or MC.
post #33 of 54

The reason Apple aren't diving into NFC or anything like it is because it's a solution that's not solving any particular problem. The store card thing is quaint though, but just that - quaint.

 

People still like using cash, they have a bit of plastic in their wallets for card purchases, so what problem is the NFC solution actually solving?

 

And can you imagine the security nightmare over in Androidland when viruses start trying to get access to your wallet?

 

There is also this telling statement:

 

and the possibility that the company would in some ways need to become a bank.

 

Finally - a grown up company! It's annoying that all these companies (phone companies, Google, etc) want to be a payment processor yet none see the fact that they are offering banking services.

 

And they have a reason to avoid banking regulations - they would have to treat their customers properly. You can't screw people around over their money. Heaven knows how Paypal have got away for so long though.

 

But if people want to handle my cash - then they need to man up and become a bank.

post #34 of 54
Quote:
Originally Posted by ChiA View Post


That is to say you're suggesting Apple uses iTunes accounts to become a rival to Paypal, nothing new.

What you're suggesting can be just as easily accomplished now with Paypal.

This is what's been said for some time now. Apple has more accounts than anyone other than the three big credit card companies. They also have vast experience processing transactions down to 99 cents. If everything went through iTunes, then to your credit card, as it does now, then that would work.

But from what the article says, Apple has some concerns.

There's no rush. This hasn't taken off yet, and they've likely got another two years before they decide.

I'm also not so sure they care about adding another chip to their phone. I've read a. Umber of articles that suggest Apple would rather do this through BT 4, which uses very little power, or even WiFi, which every device already uses.

I would imagine that apples retail partners would be interested in doing this. It's also possible, given the large amount of money Apple spends each year helping manufacturers of their goods, that Apple might help to buy, or set up the required hardware Nd software to those retailers, at least the big ones.

We know this works in Apple's almost 400 stores. Why should they do it some other way? There's no evidence that they are interested in it.
post #35 of 54
Quote:
Originally Posted by melgross View Post

…or even WiFi…

They better be coming up with a new crazy-secure standard if that's their plan, because no way would I trust this sort of thing over Wi-Fi.

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post #36 of 54
Quote:
Originally Posted by Gatorguy View Post

On another site that only posts from "9 to 5" they believe it's carrier's resistance more than Apple taking it slow. 

Verizon, AT&T and T-Mobile are part of a separate, competing wallet system called Isis that has yet to get off the ground. But that hasn’t stopped the three telcos from colluding to stop competition, however.



Even though Google Wallet is over a year old, it has yet to get on any of these three carriers’ devices. In fact, to get it on AT&T and T-Mobile, Google has to sell the Galaxy Nexus unsubsidized without any T-Mobile or AT&T branding. T-Mobile and AT&T refuse to subsidize the Galaxy Nexus so long that it has Google Wallet (they do subsidize the Nexus S so long as Wallet isn’t added).  On the Verizon version of the Galaxy Nexus, the Google Wallet app is blocked. Sprint is the only carrier that allows Google Wallet – but as a partner with Google, it would be just as unlikely to allow an Apple mobile wallet as ‘Team Isis” above.



This is making the assumption that Apple would be using NFC, and doing it the conventional way. But no one has attempted to prevent them from using it in their own stores, of which there are now hundreds. I've used it there several times, and it works pretty well. I don't see how they could stop it if another retailer, say Best Buy, decided to use it. And Starbucks allows payments through your iPhone now, using their app.

I think that if Apple wanted to, they could do this without the carriers. After all, what the carriers are trying to do isn't a done deal either. It's not as if their system is in place all over, and Apple would be trying to overturn it. Their system may never succeed.
post #37 of 54
Quote:
Originally Posted by Tallest Skil View Post

They better be coming up with a new crazy-secure standard if that's their plan, because no way would I trust this sort of thing over Wi-Fi.

WiFi is secure enough if you have a proper password. WPA-2 allows very secure passwords. Don't get too paranoid.

And since when has a four digit PIN number ever been secure?
post #38 of 54
Quote:
Originally Posted by melgross View Post

WiFi is secure enough if you have a proper password. WPA-2 allows very secure passwords. Don't get too paranoid.

WPA2 was cracked, though.
Quote:
And since when has a four digit PIN number ever been secure?

You're implying I don't still prefer giving people pieces of cloth. lol.gif

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post #39 of 54
WiFi will be plenty secure enough for Apple. Let me explain.

With a normal existing transaction, information about you has to be sent to the POS terminal for processing. Your CC number is handed over either via swiping or tapping. That is information criminals would like to get. With NFC they might try to set up a wireless skimmer, for example.

In the system I'm describing (your iPhone as the POS terminal) no personal information is ever transmitted. The store sends to your iPhone it's merchant number (unique ID) and transaction details (dollar amount, time, date and maybe even a transaction summary of what you bought). Your iPhone contacts iTunes with your device ID and the transaction details, verifies you have funds and then proceeds to process the transaction. iTunes sends back to your iPhone a confirmation number which your iPhone relays to the retailer to verify your payment went through.

If a criminal scanned the entire transaction they would gain nothing. They don't have any personal information about you. They don't know the bank account of the merchant. They don't even know if you used a CC or gift card at iTunes to make the purchase. All they know is a certain iPhone ID made a payment to a certain merchant ID.

Now some might think criminals could use this data to make their own iPhone App and use the information from device ID's they scanned in stires to buy stuff using iPhones with cloned device ID's. Sort of like copying a CC. This is also easily prevented. The App on your iPhone would be "synced" to iTunes and along with the transaction details a unique "code" could also be sent. Someone scanning your phone transmissions over WiFi would see this number, but would have no idea what the next number in the sequence would be.

I think by making your iPhone the POS terminal transaction security goes up. No more worrying about the shady guy at the gas station skimming your cards. The power is taken from the merchant and given to the buyer, since their personal device (iPhone) does the actual transaction.
post #40 of 54
Quote:
Originally Posted by SolipsismX View Post


MasterCard already stated that a company like Apple needs to be behind the shift to NFC. I wonder if that is some foreshadowing. I can see Apple using the hundreds of millions of CCs on file to use as a middle man for all these payments through MC, Visa, and AmEx.
They don't have to make a major profit on the transactions. It can be like their other services where it's just a way to sell more HW so their goal is to pretty much break even. That makes me wonder if something like 0.025% per transaction would be more than sufficient to cover their expenses... and then some.
For those that have used their Apple Store app to scan and buy a product without assistance from an Apple Store employee you already know they allow for atypical product sales from your phone via the CC on file with your iTS account. This is alright but it's only part of the process, like with PassPort. NFC (or something like it) is the only way to move this to the next level of usability and security.
As for first being well-implemented, that's a chicken and egg problem. How did we ever get credit cards, ATM and debit cards in circulation? They are all before my time but i assume it was like most other culture changing conveniences where you have the old and new way being used concurrently until the new way is so popular, well vetted and ubiquitous (for a given area) that the old way just gets forgotten or is kept as a "just in case" backup. Even now we still use cash even though it's a very insecure method of transferring funds.
So NFC coming this year to the 2012 iPhone (can't call it the 6th release of the iPhone without feeling Melgross's wrath).

 

I use my PayPass card everywhere, and only in the last month or so the PayPass chip has either burned out (it's no longer working at any store) or all the retailers don't know when their readers are broken, but it seems like too much of a coincidence for them to all be broken at the same time.

 

I now have to use the chip card everywhere. It' hasn't deterred me from using the credit card, but unlike American cards and stores, if you try to swipe your card here, you get told to use the chip, they'll only use the mag-stripe if the reader is not working and have no other machines.

 

The Asian countries have cards that started out as transit passes, guess what, it also just so happens that transit is what connects those countries together, not cars. You'll have to settle for regional NFC cards and fallback to chip+pin or mag-stripe wherever it doesn't work. So Apple doesn't really have any excuse not to put NFC in the device, as there are fallback mechanisms already in place (most everyone still has a mag-stripe-capable card or ... cash.) 

 

So what is far more likely is that NFC will be rolled out in cities that have mass-transit systems, since the easiest step to take is to get rid of all the paper-waste and metal tokens used for transit currently, and use one reusable, reloadable card. If this can be programmed into a phone, that gets rid of a lot of fare-evasion. Then it could move up to coffee shops, restaurants, and so forth.

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