Even if the next iPhone has a mobile wallet app and a Near Field Communication chip inside, don't expect contactless payments to suddenly explode in the U.S.
Despite its influence in the smartphone realm, Apple is only one part of a complex world of wireless financial transactions that involves banks, credit card processors, smartphones on several operating systems, merchants and NFC payment terminals, analysts said.
In the U.S., which lags behind Japan and South Korea on contactless payments, there is already a well-established banking network that supports customers with credit cards and ATM machines to provide a ready supply of cash and credit. Such a variety of choices for buying things has reduced the demand in the U.S. for phones with NFC technology for making mobile payments. Recent polls show that Americans aren't that interested in using NFC smartphones or mobile payments. (Mobile payments is a broad category that includes using text messaging, contactless payments and the Web to make payments and purchases from a mobile device.)
"To date, mpayments [mobile payments] in the U.S. have seen minimal growth, despite high estimates over the past decade," market research firm IDC wrote in a May report. "The U.S. consumer is not yet sold on mpayments, as only 19.3% have decided to make a payment using a mobile device." That 19.3% represents 494 respondents out of 2,560 people surveyed, IDC said. Of that 494, only 7.7% (38 people) had used a mobile device with NFC.
Apple has long been expected to launch the next iPhone, possibly by this fall, with an NFC chip inside that would work with some type of mobile wallet app to allow quick purchases from merchants or transit providers. Users would enable the app, probably with a PIN, and quickly pass the phone near a payment terminal to transfer funds from an established account, likely a traditional credit card, such as Visa, MasterCard or American Express.
Google launched Google Wallet for NFC-ready Android phones on Sprint last September, and despite more than 100,000 payment terminals in the U.S., the project has thus far seen only modest success, analysts noted.
"If Apple ships an NFC-ready iPhone, that could prod people to buy it, but the Google Wallet hasn't really done anything [to further contactless payments]," said Will Stofega, an IDC analyst. "In order to have a real takeoff of NFC, you have to have it everywhere. We're in the early stages."
Apple has been shipping more than 30 million iPhones per quarter, but even at that rate, iPhones with NFC and a mobile wallet app won't even reach the mass market of U.S. users until 2016 at the earliest, according to a recent Gartner forecast.
Juniper Research, in a study released Wednesday, found that only 2% of U.S. and Western European NFC-ready smartphone users will buy goods with such devices in all of 2012. The figure is expected to increase to 25% in 2016.
An iPhone with NFC and a mobile wallet app "will help drive NFC phone penetration, but will do little for [growing] the ecosystem, which involves banks, telcos, card networks, merchants, processors and more," said Gartner analyst Sandy Shen.
Shen also predicted that Apple won't use its popular iTunes app with NFC smartphones for billing. Instead, Apple is more likely to rely on having customers make a direct link to their credit cards or bank accounts for a smartphone purchase "because of the higher risks involved" in NFC purchases, she said.
Bob Egan, an analyst at The Sepharim Group, said, Apple may be working within a new framework with mobile payments,w here Apple decides to operate as a "pseudo bank."
"Apple has to do something really revolutionary" to reduce the cost of credit card fees borne by merchants, sometimes in the 3% range," Egan said.
"Small businesses are really getting killed with those fees," he added. Even the newer technology from Square that adds a special attachment to a smartphone to swipe a credit or debit card involves a fee of nearly 3% on a merchant, he noted.
While NFC and mobile payments have not generated much consumer interest, a consortium of three wireless carriers called Isis is planning deployments of mobile payments with NFC phones this summer. The plan has added interest over to what Apple might do with the next iPhone.
But the slow movement forward with NFC payments in the U.S. is unimpressive, Egan added.
"There is no driving desire to have NFC," Egan said in an interview. "There's no significant driver behind this technology that the consumer is aware of, or that a retailer is aware of, that will create a different buying behavior by consumers. I don't see the motivation or the awareness being created. This is a very slow growth market."
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is email@example.com.