Apple Deliberately Holding Back on Mobile Payment System

The Wall Street Journal profiles Apple's "go-slow" approach to mobile payments. In June, Apple announced the inclusion of a feature called Passbook to iOS 6. Passbook allows users to keep loyalty cards, tickets and coupons in one central app. Passbook, however, does not offer a full payment system which has been a rumored area of research for Apple.

iphone visa mobile payment

The Wall Street Journal reveals that this is a very deliberate decision from Apple:

Holding back in mobile payments was a deliberate strategy, the result of deep discussion last year. Some Apple engineers argued for a more-aggressive approach that would integrate payments more directly.

But Apple executives chose the go-slow approach for now. An Apple spokeswoman declined to comment on the decision-making process. Apple's head of world-wide marketing, Phil Schiller, in an interview last month, said that digital-wallet mobile-payment services are "all fighting over their piece of the pie, and we aren't doing that."

According to the Wall Street Journal's sources, a small group within Apple was reported to have been investigating a new service that would embed payment methods into the iPhone or even build a new payment network. Discussions reportedly included Apple facilitating payments with merchants and even all the way to the possibility of Apple to begin acting as a bank. Apple also considered simpler wallet app possibilities or working with existing middlemen and taking a small cut of each transaction.

Meanwhile, the Apple iPhone team had indeed explored NFC communications options in the next iPhone. Various concerns included impact on battery life, security, vendor adoption and customer satisfaction.

Ultimately, Passbook is said to be the current compromise while Apple presumably waits to see how the mobile payment market matures.

Top Rated Comments

nagromme Avatar
120 months ago
John Gruber had some convincing podcast discussion of why he thinks Passbook may be a glimpse of a really big deal, a future plan that Apple is slowly and strategically building up:

http://muleradio.net/thetalkshow/6/

“Innovation” doesn’t automatically mean rushing ahead into the latest buzzword, succeed or fail. Apple’s style of innovation is more focused on doing a thing right than doing it rushed.

P.S. I have utterly no use for Passbook now. But if, SOME day, I can choose to no longer have a wallet, or even house keys (NFC!) I think I’ll appreciate that. Or even if I carry one “backup” ID card of some kind in case of hardware failure. Lugging my current stack of cards and cash and keys seems like something the future might not need....
Score: 11 Votes (Like | Disagree)
cvaldes Avatar
120 months ago
I'm actually glad to hear this. I want the next iPhone but am not yet comfortable with NFC technology. I'm sure there'd be an option to turn it off, but even so I'm a bit relieved they're not plunging in until more details have been ironed out.
The problem isn't the technology, security or even Apple. The real issue is that most of the industrialized world has yet to agree on a standard for NFC payments.

The Japanese and South Koreans have been using NFC contactless payment enabled cellphones since about 2005. There are no horror stories coming out of southeast Asia, so presumably they have implemented security correctly.

RFID and NFC payment systems have been around for quite a while here in the United States, but they are pretty limited. Most of the major public transit systems in large metropolitan areas have NFC rider cards. Here in the SF Bay Area, it's the Clipper Card which covers eight transit agencies. Additionally, there is FasTrak which is a statewide toll payment system; here in the Bay Area it mostly covers bridge tolls, however there are some express lane tolls it covers, both here in the SF Bay Area as well as Southern California.

Many credit card terminals in retail stores are also enabled for NFC contactless payments. Chase issues both Visa and Mastercard credit cards with PayPass NFC technology. Although no one uses it though.

It would be wonderful if my next phone could be used as a transit pass, it would remove one card from my wallet. That's actually how the "osaifu keitai" (literally "wallet phone") became popular in Japan; it acted as a Mobile Suica card for JR East, the biggest rail operator in metropolitan Tokyo.

Any hesitation by Americans about such a system is unfamiliarity or ignorance, not a problem with the technology which has been heavily used in a consumer environment for many years.

This is HIGHLY disappointing. Japan and other nations have been using NFC systems for a long time; vending machines, pay stations/check-outs, airlines - all used through NFC tech. If Apple is simply using an app that requires a barcode to be scanned as currently implemented this would be disappointing (many companies do not own the proper scanners).

Again, holding back on tech already available on other devices in order to "work out" the system (i.e. "how much money can we make off this from the banks and stores?")
Again, the problem lies with the lack of multi-national standard. American Express has recently removed NFC chips from their Blue credit card. My old one had the chip, the one recently issued does not.

In Japan, basically NTT DoCoMo said, "here is our system, end of discussion." Most readers here aren't really familiar with NTT DoCoMo, but they are *the* dominant mobile operator and were pretty close to being a monopoly for many years.

I should be pointed out that using the iPhone has a scannable electronic pass is not new. Several US-based airlines offer mobile boarding passes (I used this on American Airlines a couple of weeks ago).

This is an example of when typical competition between corporations actually does not help the consumer. We are years behind the Japanese (who introduced the wallet-phone in 2005) because dozens of companies are working on their own systems to hopefully grab a larger piece of the pie. Meanwhile, there is virtually no adoption since no merchant wants to invest heavily in a losing horse.

Undoubtedly American Express has invested millions in their now-dead NFC technology as well as their previous smart-chip card technology (I had one of those USB Blue Readers -- it provided zero benefits to me).
Score: 10 Votes (Like | Disagree)
pensoftware Avatar
120 months ago
I don't think they're not trying to be innovative... it's just that everyone's trying to do their own thing and to jump into such a balkanized market isn't in the best interest of Apple and their customers. Why try to start a NFC and have no stores try to adopt it because they already tried Google Wallet, or whatever?
Score: 7 Votes (Like | Disagree)
nuckinfutz Avatar
120 months ago
So much for being an innovative company...

Translated:

Apple didn't add what "I" think is important so I'm going to throw a tantrum.
Score: 6 Votes (Like | Disagree)
3282868 Avatar
120 months ago
This is HIGHLY disappointing. Japan and other nations have been using NFC systems for a long time; vending machines, pay stations/check-outs, airlines - all used through NFC tech. If Apple is simply using an app that requires a barcode to be scanned as currently implemented this would be disappointing (many companies do not own the proper scanners).

Again, holding back on tech already available on other devices in order to "work out" the system (i.e. "how much money can we make off this from the banks and stores?")
Score: 6 Votes (Like | Disagree)
Carlanga Avatar
120 months ago
NFC payments, only on the iPhone 5S :rolleyes:
Score: 6 Votes (Like | Disagree)

Top Stories

apple california streaming event

Apple Event Announced: 'California Streaming' on September 14 With iPhone 13, Apple Watch Series 7 Expected

Tuesday September 7, 2021 9:03 am PDT by
Apple today announced that it will be holding a special event on Tuesday, September 14 at 10:00 a.m. The event will take place at the Steve Jobs Theater on the Apple Park campus in Cupertino, California. As with WWDC and last year's fall events, this new event will be held digitally with no members of the media invited to attend in person. Apple will likely provide pre-taped segments for...
Apple Prefer Lightning Over USB C Feature

iPhone Sticking With Lightning Port Over USB-C for 'Foreseeable Future'

Tuesday March 2, 2021 9:32 am PST by
Apple will retain the Lightning connector on the iPhone for the "foreseeable future," with no intention of switching to USB-C, according to reliable analyst Ming-Chi Kuo. In spite of much of the industry moving toward USB-C, Apple will not be using it to replace the Lightning connector on the iPhone 13, or indeed on any iPhone model for the time being. In a note seen by MacRumors yesterday,...
youtube apple tv

YouTube Discontinuing 3rd-Generation Apple TV App, AirPlay Still Available

Wednesday February 3, 2021 3:09 pm PST by
YouTube is planning to stop supporting its YouTube app on the third-generation Apple TV models, where YouTube has long been available as a channel option. A 9to5Mac reader received a message about the upcoming app discontinuation, which is set to take place in March.Starting early March, the YouTube app will no longer be available on Apple TV (3rd generation). You can still watch YouTube on...
original iphone

Phil Schiller Says iPhone Was 'Earth-Shattering' Ten Years Ago and Remains 'Unmatched' Today

Monday January 9, 2017 7:15 am PST by
To commemorate the tenth anniversary of the iPhone, Apple marketing chief Phil Schiller sat down with tech journalist Steven Levy for a wide-ranging interview about the smartphone's past, present, and future. The report first reflects upon the iPhone's lack of support for third-party apps in its first year. The argument inside Apple was split between whether the iPhone should be a closed...
iOS 15 icon on phone

Apple Seeds Sixth Betas of iOS and iPadOS 15 to Developers

Tuesday August 17, 2021 10:05 am PDT by
Apple today seeded the sixth betas of iOS and iPadOS 15 to developers for testing purposes, with the updates coming one week after Apple released the fifth betas. Registered developers can download the profile for the iOS and iPadOS betas from the Apple Developer Center, and once the profile is installed, beta updates will be available over the air. iOS 15 is a major update that...
maroon5memories

Apple Collaborates With Maroon 5 to Add 'Memories' Song to Photos App

Wednesday September 25, 2019 12:02 pm PDT by
Apple has teamed up with Maroon 5 to add the group's new song "Memories" to the Memories feature in the Photos app, allowing it to be used for photo slide show creations, reports Billboard. "Memories" will be available as a soundtrack option for a limited time and it is available to iPhone and iPad users running the latest iOS 13 and iPadOS software. Memories in the Photos app are created ...
it home ecommerce app iphone 13

iPhone 13 to Launch on September 17, AirPods 3 on September 30, Claims Report

Wednesday August 25, 2021 2:42 am PDT by
Apple may be planning to launch the iPhone 13 on Friday, September 17 and third-generation AirPods on Thursday, September 30, according to an image of an e-commerce app discovered by Chinese language site IT Home. The screenshot, originally posted by Weibo account @PandaIsBald, suggests all four iPhone 13 models will go on sale on September 17, followed by the AirPods 3 on September 30....
MacBook Pro Coating

Apple Launches Quality Program for MacBook Pro Anti-Reflective Coating Issues

Saturday October 17, 2015 7:58 am PDT by
Apple has issued an internal notice about a new Quality Program that addresses anti-reflective coating issues on MacBook and MacBook Pro models with Retina displays, as confirmed by multiple sources. These issues include the anti-reflective coating on displays wearing off or delaminating under certain circumstances. Apple will replace Retina displays on affected MacBook or MacBook Pro models ...
iPhone 13 Dummy Thumbnail 2

Full iPhone 13 Feature Breakdown: Everything Rumors Say We Can Expect

Tuesday August 31, 2021 7:50 am PDT by
With the launch of Apple's iPhone 13 lineup believed to be just a few weeks away, we have compiled all of the coherent rumors from our coverage over the past year to build a full picture of the features and upgrades coming to the company's new smartphones. For clarity, only explicit improvements, upgrades, and new features compared to the iPhone 12 lineup are listed. It is worth noting that...
iphone 12 colors 2021

iPhone 12 Colors: Deciding on The Right Color

Thursday November 5, 2020 8:35 am PST by
The iPhone 12 and iPhone 12 Pro arrived in October 2020 in a range of color options, with entirely new hues available on both devices, as well as some popular classics. The 12 and 12 Pro have different color choices, so if you have your heart set on a particular shade, you might not be able to get your preferred model in that color. iPhone 12 mini and iPhone 12 The iPhone 12 mini and iPhone...