Much of the reaction surrounding Apple’s new 5C and upmarket 5S iPhones focused on the user experience, but it is the less attention-grabbing business-related features that will have the biggest effect in the longer term.

What was most important from retailers’ point of view was what wasn’t discussed, rather than what was.

Most obvious is Apple’s continued refusal to adopt near field communication (NFC) technology, as its reticence means a question mark will remain over NFC’s future dominance.

Its adoption of Bluetooth Low Energy and its fingerprinting function TouchID show it’s gearing up for a very different approach to mobile payment.


NFC may yet take off with or without Apple - most other mobile devices on the market contain the technology. But having Apple on board would certainly make things easier for NFC’s proponents.

Jan Dawson, chief telecoms analyst at Ovum says: “Apple still doesn’t have NFC in its phones, which is how other device vendors have supported payments, and it looks like it won’t anytime soon.”

Alex Sbardella, head of mobile at consultancy Red Ant says it is clear Apple is backing other horses in the mobile payment race. “I think it’s now safe to assume NFC will never make it into the iPhone, which is a serious blow to NFC’s hopes of mass market adoption - with it missing from the most visible phones on the market, retailers will continue their reluctance to spend the money on NFC infrastructure.”

James Chandler, head of mobile at media agency Mindshare UK, adds NFC is not intuitive enough for Apple. “Apple is about clarity and making this simple - this area is still hugely complex and confusing, and they’ve chosen not to play in it.”

Many retailers have already rolled out contactless NFC-enabled terminals, however - Waitrose, Boots, M&S all use it and Peter Stubbs, director at PriceWaterhouseCoopers, says: “I still think NFC has a chance as retailers have rolled out extensive contactless technology, and we are really waiting for the right wallet service to bring it to life.”


iBeacon uses Bluetooth Low Energy technology, which involves a network of small Bluetooth devices being placed in stores that communicate with smartphones and payment terminals in a similar way to Wi-Fi. iBeacon wasn’t discussed in the press events yesterday, but it will be included in the new Apple mobile operating system iOS7 update released on September 18. For some this is a significant step, as it will enable hands-free payment.

Joel Blackmore, senior innovation manager at mobile consultancy Somo, says: “iBeacons will be the biggest change for retailers since smartphones. Within the space of a month or so there will be 700 million iOS devices with iBeacons, enabling indoor positioning, micro-location and a new form of contactless payment.”

Sbardella says iBeacon is important because its retail opportunities go beyond payment.

“Most of the early use cases for iBeacon are retail related. It’s an inexpensive way to solve the long-existing problem of accurate indoor mapping, which is a huge boon for large stores; for example, pushing different offers or information to customers based on what department they are in, or even how long they have been lingering in one place, with ‘Need some assistance?’ messages.”

Steve Thomas, chief technology officer at Omnico Group, adds iBeacon could be a more natural evolution for retailers. “iBeacon provides far better coverage [than NFC] allowing true micro-location services to become a reality. In addition, Bluetooth technology is ubiquitous on all smartphones.”

Matthew Knight, head of innovation at media agency Carat says the technology is interesting, but in its infancy. “It’s up to developers and retailers to work together to rapidly understand its opportunities and the most valuable use cases. Right now, examples of frictionless check-ins or interactionless payments are interesting, but we’ll need to wait and see how consumers react to this non-intervention based world,” he says.


Could fingerprinting become a central part of mobile payment? Maybe, but there are some big questions to answer before it becomes mainstream. Security concerns have helped to put the brakes on widespread mobile adoption and fingerprinting may help allay these, but it could yet turn out to be a gimmick.

Stephen Ebbett, global director of gadget insurer Protect Your Bubble says the technology has so far proved temperamental, with factors like sun exposure and dirt affecting how well it performs. He adds: “Mobile fans will have to wait until they can get their fingers on the 5S to determine if Apple can deliver biometric functionality that is vastly improved.”

David Lowrence, retail industry consultant at Fujitsu says some countries already use fingerprinting for payment verification, and says Apple’s use of the technology will spur wider use of digital wallets in general.

But as with most other things in mobile payment, the dominant authentication method is still undetermined. Apple’s big advantage, however, is being able to test the technology on its huge user base. Knight says: “Apple’s customer base means that TouchID will be in the hands of many consumers very rapidly, and with retailers like Starbucks offering mobile payments already - it will be a space with a large audience to test concepts with.”

What do retailers need to do?

It’s still unclear what Apple’s overall strategy on payment will be, although there are some fairly big clues here. But sitting and waiting for a clear answer is not an option.

Apple is also developing its Passbook offer which currently saves coupons and offers from retailers but could be developed into a full digital wallet. Passbook will form a central part of Apple’s eventual mobile payment offer.

Knight says: “With all of these points, retailers need to start exploring and testing concepts with consumers, rather than staking their investment against any one particular technology or consumer behaviour, so they’re able to understand their own particular audiences’ acceptance and adoption of new technologies and concepts.”

The only true way of understanding how these things will work for each retailer’s audience is by testing new ideas and investing in innovation.


Apple's new iPhone 5S opens up possibility of paying by fingerprint technology