Apple's near field plans mean iPhone will be 'iWallet'

So there was this guy, a busker, and he was playing the most beautiful guitar. I didn't have any cash on me, so I went to tell him I liked him but had no money. He told me he could take a small payment by phone, if I liked.

"After all," he said, "even if you're sleeping on the streets you can still pick up a phone." I gave him a dollar just by passing my iPhone near his phone.

A fantasy? Maybe, but Apple's iPhone seems on course to finally open up the market for near field communications technology, with RFID-based, highly secure, paperless payments. What follows is a selection of ideas, which seemingly lead to this mobile payments mardi-gras.

Apple was first reported to be testing RFID iPhones last year.

There's already several iPhone-as-payment-system offerings for merchants. Indeed, the $100 million iPhone developer KPCB’s iFund is thought to have invested in some of these systems.

Now, speculation suggests Apple may intend kick-starting this sector, beginning with the acquisition of contactless/near field communications tech firm, VIVOtech.

Based in Santa Clara, ViVOtech provides "Contactless/near field communications (NFC) payment software, NFC smart posters, contactless readers/writers, and over the air card provisioning, promotion, and transaction management infrastructure software," according to its own company description.

The speculation begins at Bloomberg, where IDC analyst, Will Stofega, reportedly suggested VIVOtech could become a potential Apple acquisition target, citing recently revealed Apple patents for mobile purchasing and touch-screen technology.

The analyst later told PaymentsSource that contactless payments and financial transactions -- just like that small payment to that busker -- are "an interesting thing that kind of hasn't taken off."

Why? Because the technology needs to reach a level of advancement sufficient to foster an experience that's seamless, secure and consumer friendly.

An Apple acquisition of Vivotech could help the company deliver just that. It would also give Cupertino the expertise it needs to refine a system that could work -- and appeal to -- the broad consumer market.

Apple has a range of patents which could be utterly emancipated by such secure near field technologies.

Take the recently published Motion Based Input Selection patent, this couples with RFID and an onscreen combination lock to act as a wireless, non-physical iPhone-controlled key, the so-called 'iKey' patent.

A June 2009 Apple patent revealed it has developed a method for building an NFC (Near Field Communictions) antenna into a touch screen. The 'touch screen RFID tag reader' patent application explains that:

The RFID antenna can be placed in the touch sensor panel, such that the touch sensor panel can now additionally function as an RFID transponder. No separate space-consuming RFID antenna is necessary.

More recently, the US Patent Office published details of Apple's iTravel solution. This is evidently being developed with help from the airlines and aims to let you use your iPhone instead of your airline ticket, with features including airline check-in and baggage identification, advanced electronic ID, car rentals, hotel and airline reservations."

"Apple's iTravel is yet another Near Field Communications based application within a host of recent revelations," Patently Apple explains.

Apple has similar patents covering event ticket purchasing, and more.

We've barely scratched the surface of what Apple may intend for NFC-based solutions in future iPhones. A little more intense scrutiny of its published patents reveals dozens of patented technologies which could be unlocked by the future introduction of NFC-equipped iPhones.

Granted, at this stage the notion of NFC or RFID-equipped iPhones is pure speculation. Even Gizmodo's stolen iPhone 4G unit wasn't identified as carrying RFID.

That these patents are emerging at an ever faster frequency while the company engages in uncustomarily frequent acquisitions suggest this is reaching an important point. (Though Apple sometimes shows its biggest clues years before products it is developing reach market).

It does seem pretty clear the company sees location awareness, personal information, social networking and geo-positioning as a series of market drivers for a full-scale evolution of what is possible in the mobile market. (I touched on this in yesterday's post).

Returning to Vivotech. The company already has over 600,000 contactless point-of-sale readers in use globally.

Former Vivotech exec, Todd Ablowitz, president of the Double Diamond Group, thinks Apple may be after those 600,000 points of sale to kick-start its payment plans.

Quick assessment: We now have iPhones as payment systems, potentially we have Vivotech for points of sale, where's the money?

iTunes, that's where.

A long way since SoundJam, iTunes has become Apple's media and apps management, discovery and acquisition solution. And it's not just sitting on the shelf. iTunes already holds the account details of 100 million customers, and already has a payment processing system capable of scaling between small sub-dollar payments all the way to more.

"If they want to build a payments ecosystems, what would be a better target?" Ablowitz said, speaking to Payments Source.

Tie those accounts up to payment processing systems and 100 million people would feasibly be able to use their near field Apple device to pay for goods and services at any participating outlet.

Once that solution scales down to consumer-to-consumer payment systems, then PayPal has a problem, and that busker I met on the street in the story up above?

He gets paid.

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