Is Apple’s iBeacon About to Kill Near Field Communication Mobile Payment?
One glaring omission from the Specification webpages of Apple’s latest iPhones is Near Field Communication (NFC). This is counted as a perceived weakness of the new devices despite a lack of a decent real world use of such a feature. That is, there is nothing understanding or life changing about having NFC on your smartphone at the moment. And Apple has said as much. Hence, the absence of the features in the new iPhones. Of course, many Samsung smartphone owners will point to bump and share. However, media sharing has been made a lot easier in iOS 7 via Airdrop.
NFC is Not Driving Mobile Payment as Fast as Many Expected
Nevertheless, many might point to the rise of mobile payment as an important reason to build smartphones with Near Field Communication technology. Despite the huge promise of the advantages of NFC in commerce, the technology has not lived up to its full potential as yet.
According to a recent report from Gartner, NFC will account for only about 2 percent of total mobile-payment transaction value in 2013 and 5 percent of the total transaction value in 2017. The firm sees some faster growth in NFC payments possible in 2016 when the penetration of NFC mobile phones and contactless readers increases.
“The problem with NFC is twofold. For one, it requires that both devices and payment terminals be equipped with technology to initiate and receive transactions that turn mobile phones into virtual digital wallets,” Marguerite Reardon wrote for CNET. “Handset makers have been slow to include the technology in their devices. For instance, the popular Apple iPhone still does not support NFC. And wireless operators have been even slower in allowing payment services leveraging the technology on their networks. Of course, even with NFC-enabled handsets there still aren’t enough payment terminals deployed yet to accept contactless payments via NFC.”
“The second problem NFC faces is that it is a technology in search of a problem. Using a mobile phone to make an in-store payment is no easier than using a credit card. The industry has done a poor job identifying any reason for consumers to abandon their physical wallets and instead use their smartphones to pay for things,” Marguerite Reardon said.
iBeacon to the Rescue
Perhaps Apple has anticipated these issues and has wisely decided to avoid this technology for the time being and not fall into the same predicaments as their competitors. Currently, Google and Samsung are using NFC for media sharing, which is a far cry from it’s intended purpose of Mobile Payment. Interestingly, Apple iWalltet patent mentioned the use of NFC, hence the technology will probably find its way in future Apple products, but at the moment, the company is banking on iBeacon.
iBeacon was part of the developer SDK announced with iOS 7 and one developer in particular that has started taking advantage of this feature is Estimote. They have developed the Estimote Bluetooth Smart Beacon, which are iBeacon-compatible.
According to the company’s website:
An Estimote Beacon is a small, wireless device, sometimes also called a ‘mote’. When placed in a physical space, it broadcasts tiny radio signals around itself.
Think about it as a very small lighthouse. Smartphones that are in range are able to ‘hear’ these signals and estimate their location very precisely, as well as communicate with the beacon to exchange data and information.
Another company that has jumped on the Beacon bandwagon is PayPal. The company has launched their own range of Beacon products called – PayPal Beacon.
According to PayPal’s website:
PayPal Beacon is a Bluetooth Low Energy device to connect to a customer’s PayPal app when they enter a store. With one vibration or sound on your phone, you’ll know you’re checked in. And when you’re ready to make a purchase, all you have to do is say you’re paying with PayPal and the transaction is automatically completed: no cash, cards, taps, or signatures required—all hands free.
PayPal Beacon will connect consumers to enhanced shopping experiences such as automatically ordering your favorite dish at your usual lunch spot, or getting personalized service at your favorite clothing store. In addition, you can choose to accept messages from stores that you walk into, so that you can take advantage of special offers in the produce aisle.
Based on what we have seen so far, Beacons appear to provide a more engaging, cost effective and frictionless mobile shopping experience than it’s NFC counterpart. Exactly the was Apple likes it.
To conclude, Apple has clearly decided to go with Bluetooth 4.0 over NFC for the time being. The technology is in all current and previous generation Apple devices. Only time will tell if the Cupertino-based company has made the right decision, again.