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Thursday, June 8, 2017

Apple to expand NFC uses, make P2P play

News this week from Apple Inc. could pave the way for much broader use of near field communications (NFC) technologies in mobile commerce, as well as increase competition in person-to-person (P2P) payments.

NFC has been a go-to technology for mobile payments, particularly in the United States. But potential NFC applications don’t end there. With the advent of NFC tags, the same tap-and-go functionality that makes paying with smartphones fast and easy can also be used to access and transfer information. Potential applications are limitless, according to experts. But the end-user universe has been limited by Apple’s refusal to expand NFC functionality in its phones beyond payments.

On June 5, 2017, the technology giant let it be known that a “core” NFC framework will be included in its next-generation mobile operating system, iOS 11. Apple executives revealed the change at the company’s worldwide developer conference, and with a new documentation webpage for developers. Tag-reading functionality is slated to become available beginning this fall with shipments of iPhone 7 and 7 Plus devices, as well as Apple Watches.

A boon to NFC tag applications

While Apple gave little in the way of specifics, technology experts expect the move to lead to an explosion of NFC tag applications in retailing and elsewhere. “We’ve been anxiously waiting for Apple to make this move,” said Paula Hunter, executive director of the NFC Forum. The NFC Forum has developed several sets of technical specifications, and is working on several others that address use cases like payments and transportation, Hunter noted.

“With over 700 million iPhones being used worldwide, Apple’s release of the NFC feature has a fundamental impact on changing customer behavior,” said Lara Hanson, Chief Innovation Officer at QWASI, an NFC technology company. “NFC technology opens new lines of communication with customers to provide relevant content, creating exponential opportunities for brands to innovate the way they engage with their customers.”

NFC tags are microchips that store information and can be embedded in posters, placed on retail shelves and other commonly encountered items that that can be read by NFC-enabled smartphones. They differ from quick response (QR) codes, which can only be read using specific mobile applications. “You need an app to scan QR codes. With NFC tags you just tap to read; there’s no special app required,” Hunter said.

NFC tags have been gaining traction among retailers and in public transit agencies in Asia and Europe, Hunter noted, but not in the United States, where Apple controls about 40 percent of the smartphone market. Recently, an apothecary in Chambersburg, Pa., began using NFC tags that are affixed to shelves and allow customers to tap to access detailed information about specific products. Purple Deck, the mobile solutions provider the store is using said in a press release that this appears to be “the first time NFC technology has been deployed to this size in the United States.”

Taking on Venmo?

Apple also revealed during its June 5 confab with developers that iOS 11 will support P2P payments using Apple Pay and its proprietary messaging app iMessage. Thus, consumers with iPhones soon will be able to use the texting functionality of those devices to transfer money to other individuals with iPhones.

Users will need to add credit or debit cards to their Apple Wallets to fund transactions. Money sent is placed on a virtual cash card, which the recipient can use to make payments, or the money can be transferred from the card to a bank account.

Apple introduced Apple Pay in 2014 for tap-and-go payments at retail locations. The company stated that Apple Pay is now accepted at 50 percent of U.S. retailers with about 5 million locations combined.

Several bloggers who follow Apple and payments have suggested P2P payments supported by Apple could pose a threat to PayPal’s Venmo and other P2P services; others said the fact that it only works in iMessage limits that threat potential.

One investor, blogging at Seeking Alpha under the moniker Save Money and Retire Early, wrote, “[R]arely has Apple been the first to anything. It wasn’t the first smartphone, tablet or music player, but redefined the way all these products were used.”

Payment by smartphone is a nascent yet burgeoning market. Research and Markets projects a combined annual growth rate of 32 percent between now and 2023, when payments are expected to top $3.3 billion. end of article

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