touchid

When Touch ID was first rumored, there had been much speculation about whether the iPhone 5s would act as an electronic wallet, with payments to retailers authorized by fingerprint. While that hasn’t yet happened, it does now seem clear that it’s on the way.

Asked about mobile payments during yesterday’s earnings call, CEO Tim Cook gave what is, in Apple terms, a surprisingly direct response.

The mobile payments area in general is one we’ve been intrigued with. It was one of the thoughts behind Touch ID […] it’s a big opportunity … 

Cook’s unusually forthcoming comments very much indicates that mobile payment via Touch ID is a question of ‘when’ not ‘if.’

contactless

Some Android handsets already offer electronic wallet functionality by allowing virtual copies of cards to be uploaded to the phone, and then using NFC to authorize payment by touching the phone to a payment terminal. A recent piece in the WSJ  suggests that Apple may be planning a different approach.

The piece reported that Apple planned to allow customers to purchase physical goods from other retailers through an iTunes account, just as can be done in Apple’s own retail stores using the Apple Store app. Instead of card details being handed to the retailer, payment would be made by Apple, who would then debit the card linked to the customer’s iTunes account – effectively turning Apple into a bank, a prediction I made last September.

easypay

The combination of the two approaches – using an iTunes accounts as an intermediary, and Touch ID to authorize transactions – could potentially make mobile payment with an iPhone significantly more secure than existing electronic wallets. Given recent high profile cases of card details being compromised at major retailers (1.1M cards at Neiman Marcus, 2M cards at Target), those additional layers of protection are likely to have significant appeal to iPhone owners.

The ‘when’ question is an interesting one. While touchless payment is commonplace in much of Asia and Europe, it has not yet taken off in the USA, and Apple has a track record of taking its time over the adoption of new technology. Apple has generally seen its role as perfecting, rather than introducing, new tech.

Part of that perfecting goal is likely to be to try to encourage U.S. banks and retailers to adopt iBeacon, not NFC, as the touchless payment technology. While NFC has a head-start, iBeacon is the superior technology, and with Bluetooth LE supported by all current high-end handsets, it would be a logical choice.

That isn’t going to happen overnight, but with major retailers already investing in iBeacon technology, there’s no reason at all we couldn’t see some pilot projects up-and-running in the near future. Mass-market rollout? Well, that would certainly make a headline feature for iOS 8 …

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9 Responses to “Tim Cook as good as confirms mobile payment via Touch ID on the way”

  1. PMZanetti says:

    As much as confirms? Yes in Apple speak, I suppose. But no more so than his comment about wearable tech, particularly the wrist, being ‘interesting’

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  2. Watch Samsung rush a half baked solution into Galaxy S5 now that Tim Cook has given this strong indication that Apple may do it. The hard part is what Samsung will call their Frankenstein Monster.

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  3. So we can chalk this up as another Back to the Future prediction that has come true: “Hey kid, thumb a hundred bucks will ya? Help save the clock tower?”

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  4. technobarnes says:

    Absolutely ridiculous. You couldnt use I Beacon for touch less payments. I beacon can send and receive data up to 50 feet. If there are 5 people within 50 feet how would the terminal know who to charge. Some sort of Near field communication is necessary so that only the person purchasing will gat charged.

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    • Ben Lovejoy says:

      Only one device would be expecting the payment request, and only one would authorise it.

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      • Fabian Thobe says:

        No, I don’t see that happening either, Ben. Bluetooth is not made for payments.

        If you look at the directions Apple took with the passbook, you can see that it goes into Barcode recognition. Obviously they can’t go for NFC (even if it’s, IMHO, the dumbest decision they ever made) and iBeacon does not match the technical criteria for short range payment. I guess, we will see lots of small 4-7 inch POS displays showing barcodes to be scanned via phone.

        Anybody willing to place a bet on the race NFC vs. Barcode?

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      • Ben Lovejoy says:

        If it’s barcode vs NFC, NFC wins. But there’s a lot of talk of Bluetooth LE for payments, so I’m pretty sure it’ll happen.

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