The iPhone 'iWallet' becomes even more real today as Visa Europe launches the first commercial deployment of its own iPhone payments App today. This news as NFC-capable iPhones should show later this year, with AAPL apparently pondering ways to offer merchants cheap and easy set-up for payment kiosks -- mobile payments are nothing without the infrastructure to accept them.
Retailers, businesses and consumers have traditionally resisted the use of payment cards for low value transactions. Consumers think cards are slower than cash while retailers are put off by the cost of processing low value card transactions.
Small fry, high stakes
Today there's demand for a system that can make and take low value payments. A survey conducted by Visa Europe in the UK, Italy, Poland and Turkey found 87% of iPhone users would be willing to attach an add-on to their phone in order to make mobile payments, reports NearField Communications World.
Visa Europe's in-testing iPhone payment system requires that users employ an add-on device in order to make a payment. In this case, the trial is seeing a local bank and Turkey's biggest mobile carrier working together, the report explains.
Visa introduced an NFC certification program in December. In the UK, Visa continues to test NFC-based payment systems at its London offices.
iPhone users seem the right place to start, with Visa's survey of 4,200 people in four European countries confirming 57% of iPhone users would 'definetely' or 'probably' use Visa's mobile payment system on their device.
Apple executives have reportedly been exploring ways in which to bring a mobile payments ecosystem to market. One plan hinted at within last week's reports sees the company use iTunes as the payment-making system, with charges then applied to a user's chosen card.
This is highly reasonable. iTunes is already a capable payments system with an infrastructure custom-built to handle small-value transactions, from 59 cents and above -- you can spend hundreds of dollars in iTunes, should you wish. The iTunes payment system is scalable, though if it can compete with the converged B/OSS systems currently in vogue among carriers remains to be seen.
In the UK it is estimated that consumers make 27 billion cash transactions a year, worth a total of £250 billion. Over 80% are for purchases of less than £10.
In order to create a payment-receiving infrastructure, Apple may offer cheap terminals for taking payments. Equally, given that future iPhones seem set to possess NFC sensors, Apple could create a payment-taking App for the iPhone, iPad and a future NFC-enabled iPod touch.
Barclaycard and Barclays Bank cardholders in the UK this year made over one million contactless transactions, 150,000 of these in September. "We are reaching a tipping point," says Stuart Neal, head of payment acceptance at Barclaycard. "The number of terminals has gone from 25,000 at the beginning of 2010, to 42,500 today."
What's in it for Apple?
A chance to grab a slice of the $6.2 trillion US consumers already spend annually on goods and services.
What's in it for merchants?
A new way to take payments -- if the infrastructure is more affordable than existing means (ask your local shops how much their bank charges them for their existing card reading mechanism), then merchants may move to the new system quite fast.
What's in it for customers?
Your iPhone is your wallet.
- If you like this idea and are confident you can protect your device, then this could make life simpler.
- If you feel against it, you may not use it.
- You may even feel that you don't want your phone -- and by inference iTunes and Apple's highly-targeted iAds system -- knowing what you buy and where you acquire it.
- However, be aware, even Android-based mobile payments systems are going to gather such information.
Ultimately, Apple has a series of useful-seeming patents to support its move into mobile payments: there is no doubt that US users will quickly get used to using their devices for gig entry, travel and more. And as services such as Groupon become more location-savvy and as the databases of US consumer desire grows, there is no doubt such services will become ever more powerful.
Android also supports NFC. When Google (then) CEO Eric Schmidt introduced the technology he said, "People don't understand how much more powerful these devices are going to be."
What do you think will happen when your iPhone becomes your iWallet? Tell us all in comments below. I'd once again like to invite you to follow me on Twitter so I can let you know when these items are published here first on Computerworld.