Near Field Communication, which enables contactless payment near point of sale terminals, has been ignored by Apple in its iPhone5. While some people are disappointed with this lack, competitors can use the delay to strengthen their positions in NFC before Apple establishes a stranglehold in this space as well.
As of now, Android offers NFC and Microsoft will be offering NFC with its Windows Phone 8 and Nokia’s Lumia 920. However, the technology is still in a development stage and its availability depends on the telecom service provider and region in which you want to use it.
Apple has a Passbook system that helps with eticketing and loyalty cards, but not a full-fledged NFC. However, most industry watchers feel that this is in line with Apple’s past policy of developing a killer app and ensuring that it can garner all the customers and leverage its strength for a better margin, before introducing a facility. This is what Apple did with iTunes, and now the music industry and content creators have to share revenues with Apple.
With NFC, Apple will have many established competitors such as PayPal and Visa. However, Apple’s strategy of coming out with a user-centric app that helps ensure customer loyalty and enables it to obtain better margins from service providers will mean that the company will take at least a couple of years to come up with a great product. Competitors who do not want to be dependent on Apple later on should utilize this time to introduce a NFC product that captures the imagination of consumers if they do not want to suffer like the music industry is doing.
For now, Apple is not taking such a hard stand with passbook. It allows users to post Passes that are not rigorously vetted. However, users still need to depend on Passbook brokers. While Apple is not taking a percentage of the profits now, it could still do that later once critical mass has been achieved. Apple has the muscle to ensure that Visa and MasterCard POS terminals are extended to be used as NFCs. However, Visa and MasterCard might be wary of entering into a partnership with Apple given its history of dissolving them once it has its own apps in place – Google Maps and Sky Hook have already learned this lesson through experience. Financial players too have the strength to develop their own applications before Apple becomes too strong in the area.