As the recent Apple patent application shows, NFC and BLE are not rivals, but a potentially powerful combination of interfaces that might transform retail payments.
[Correction: as numerous correspondents pointed out, this story concerns an Apple patent filing, not an award, and I have changed the wording accordingly.]
What an interesting combination of events. I happened to be at a meeting with a large UK organisation yesterday — I won’t mention the name so I hope they won’t mind! — and one of the subjects under discussion was the combination of proximity and vicinity interfaces to deliver the best possible shopping experience to a customer. In other words, how to combine BLE and beacons with NFC and other interfaces in the best way. After the meeting, I was ambling down the road reading Twitter and I saw that Apple have filed a patent for just such a combination and thrown in tokenisation for good measure.
The patent language notes that the invention covers a commercial transaction method in which a purchasing device, such as an iPhone, finds and establishes a secure connection to a point of sale system via a first wireless interface. Following link up, the device identifies a second, different wireless interface to connect to a backend server for transaction completion.[From Apple details secure ‘touchless’ e-wallet strategy in patent filing]
So, basically, I walk into Tesco and tap something with my NFC phone, at which point my Tesco app opens up and establishes a BLE connection. BLE is used to send coupons and offers to the app and when you tell the app to check out, the app sends a token that Tesco can hand to their acquirer. At no point do Tesco ever see card data.
(It is baffling to me that companies are allowed to patent this sort of thing, by the way, but there you go. If this sort of combination of proximity and vicinity interfaces, a smartphone and a secure element was obvious to me, it must have been obvious to a great many people.)
Nothing particularly interesting in that, you might think, and you’d be right. However, it’s stll worth noting. What this patent filing does do, I think, is support the tactical approach that we have been recommending to our clients. Last year, I wrote that I thought that some observers were wrong to frame the discussion about retail interfaces as NFC vs BLE. While it is certainly true that Apple’s decision not to put NFC in the iPhone changed the trajectory of mobile payments, as I said at the time:
An HCE/NFC/BLE world seems rather attractive from a consumer experience perspective.[From You searched for hce – Tomorrow’s Transactions]
This is a very flexible landscape with a wide variety of options for retailers to choose from. Retailers that want to use their existing contactless terminal estate can complete the transaction via the NFC interface by adding HCE to their app (the Tim Horton approach – the picture below shows the Tim Horton HCE being used by an @chyppings consultant in Toronto this very week!), other retailers might decide to complete without using terminal estate at all. Some retailers might decide to use beacons to deliver offers and guide shoppers, other retailers might decide to send offers over the air. Also, remember that Apple don’t have to use NFC for the proximity trigger. Customers could scan a barcode, enter a password, whatever.
Personally, I feel that it might make sense to use proximity and vicinity the other way round, if you see what I mean. Use BLE (or other geolocation or even manual location selection) vicinity to trigger the retailer app and then use NFC (or manual checkout or barcode scan) to execute the transaction. The reason I think this is that I think the positive action of tapping is more direct instruction to transact, but given what little I know about UI, I’m open to suggestions and interested what others think.
The bottom line is that the “triple-A play” of authentication, apps and APIs is looking like a pretty good approach for the next generation of retail payments.