I love NFC, but I was sceptical that Apple would put it in the iPhone 6 because of one particular problem. Maybe Apple have solved it.
Pointless speculation about Apple turns out to be more fun than I thought, so I can’t resist continuing the tangential indulgence by reflecting further on my comments last week and trespassing on readers’ good nature by re-reading the runes to reach a different conclusion. But first, I must reiterate that these are idle speculations based wholly on publicly-available sources of information and do not constitute investment advice or inducement to purchase securities of any kind.
Let’s start by backing up a little bit and taking a look at what Apple themselves say in what appears to be the most relevant patent. As “Patently Apple” report it,
Apple’s invention…[From Apple Patent Reveals Secure iWallet System with iBeacon – Patently Apple]
It is ludicrous to call this trivial and obvious use of general-purpose computers an “invention”, but whatever.
…generally relates to methods (air interfaces) and apparatuses for conducting a wireless commercial transaction that is both user friendly and secure.
…a portable device can make purchases by using near field communications (NFC) to establish a secure link with a point of sale (POS) device connected to a backend system that is configured to execute commercial transactions. This secure link can be established by positioning the portable device to be within close proximity of the point of sale device. Increased mobility is provided to users of the portable device making purchases by establishing a second secure link that uses a different protocol, such as WIFI or Bluetooth, that has more desirable characteristics for maintaining the link over time than NFC.[From Apple Patent Reveals Secure iWallet System with iBeacon – Patently Apple]
Indeed it has, and this is one of the key reasons that I (along with many other observers) assumed that Apple’s predominant use of NFC would indeed be to trigger these kinds of connections that generate more opportunity for value-added services around coupons, loyalty points and so on. Apple filed a couple of other trivial and obvious patents on NFC back in 2013 showing it being use for the same kind of thing as well as for “gifting” media between devices.
Whether they will use the NFC interface directly for payments, which would of course require a contactless point-of-sale (POS) terminal, is another matter. Since reputable reports are insistent that they will, speculation must move on to how exactly this will work. So, as I said, and drawing on publicly-available sources only:
I can’t see why they would use it to support the SIM-based NFC model favoured by the operators or the handset HCE model favoured by the banks.[From Speculation about Apple in mobile payments]
And, indeed, reports suggest that they haven’t. The Financial Times reports that Apple is going to use an NXP chip and supposed leaked diagrams of the circuit board show its likely to be one of the NXP PN65 series of chips that have their own on-board Embedded Secure Element (ESE). I interpret this to mean that Apple have created their own handset ESE model which is controlled by them and they’ve taken this “my way or the highway” model to the payment schemes, bypassing the telcos completely and encouraging the issuers to forget about HCE apps. Therefore unlike Android, where anyone can drop in an HCE app and use contactless EMV over NFC with no SE at all, Apple have opted to keep control of the SE and the TEE (the Secure Enclave).
Now, a number of people asked me why I said I was still sceptical about NFC when the evidence (the patents, the NXP chip and the stories from reputable sources such as the FT) is so overwhelming that this is the right time for Apple to use the technology and that I am well-known as an NFC fan. Well, my reservation is because of battery life. Apple seem to pride themselves on making a terrific consumer experience. And the consumer experience on my iPhone 5 is indeed a joy. With one exception: the battery life is rubbish. Without the Mophie Juice Pack I have strapped to it, my iPhone would never make it through the day. When I’m out and about for the day, it sometimes doesn’t make it to the afternoon. And if you add NFC on top, the battery life would collapse to unacceptable levels (I know this because the battery life of my LG collapses when you turn on NFC).
Hence my focus for idle speculation today. What if Apple have come up with an interesting way of extending the battery life when using NFC? I was pondering various possibilities in the shower this morning when I remembered that Apple had another patent application last year linking the fingerprint scanner and NFC. Now, I don’t think that they will put the NFC interface in the home button because that means you would have to fiddle about with your phone to line it up with POS but… what if that NFC interface was only turned on while you held the home button? Tap the home button and you go home. Double tap the home button and you get the list of running apps. But hold the home button and NFC turns on and you can tap and pay. Let go and NFC turns off again, thus preserving battery life. If they haven’t already patented this idea, I think I will!
(Added 3 Sep 14) Stuart Fiske, who knows more about NFC/EMV than anyone else on the planet, points out that my idea is the wrong way round. It is card reader mode that burns battery, not card emulation, so there’s no need to turn off NFC. Just hold down the home button to read tags, cards, other devices. He is obviously correct. My last objection is gone. NFC payments in iPhone 6 are now odds-on!
I agree that Apple could “unlock NFC” (figuratively too) with a simple yet reassuring “hold the home button” experience
I imagine that, next to this basic “card emulation” mode, they could also offer a richer version of mobile payments, combining cards and coupons / loyality / … over a proprietary extension of NFC and/or in combination with BLE
Compared to previous attemps at standards, they could boost theirs by supporting it nativly in any Apple device to Apple device transaction + offering it licence-free to POS manufacturers
What bothers me is, assuming that Apple securely provisions in my iPhone a copy of the card I’ve stored with them (in my iTunes account ), I can’t imagine they would re-use the iTunes payment model where I pay Apple (funding transaction), and they pay the merchant (minus their commission).
Could this be what they solved in their deal with VISA, MC and Amex ? That their secure copy is a valid alias of the bank card, capable of doing “cardholder present” transactions (without the issing bank having anything to say about it) ?
That would be “disruptive”
And I’m not sure how it can work, technically, over the existing card payment rails.
Unless they route the payments over the schemes’ own P2P rails (Visa Personal Payments, MasterCard MoneySend) and completely bypass banks (i.e. also skip the Acquiring).
That would be very “disruptive” (but I give it < 10% probability)
One week to wait. Then we'll see if / how they solved it.
Yes it could work using EMV tokenisation