iPhone might bypass the credit card associations

Rumors say iPhone 5 may include Near Field Communication (NFC) technology. If Apple will indeed equip its next iPhone generation with NFC technology, it can change the way we pay.

NFC technology enables easy data authentication and therefore facilitates safely transmission of financial transaction data. iPhone 5 could easily replace the physical plastic card and communicate directly with retailers’ terminals.

Looking one step forward, Apple can turn the iPhone 5 into a fully functioning eWallet, bypassing the credit card associations altogether! As Apple already holds balances on iTunes gift cards, it can connect same balances, as well as pre-set bank checking accounts, to an iPhone 5 device and user, enabling same user to perform purchases using nothing but his new iPhone 5 device.

It’s still not clear if the upcoming iPhone 5 will indeed include NFC technology, nor if Apple is to take that extra step generating a new way of pay, yet assuming it does, with the current adoption pace of new iPhone apps, we might see the change coming our way sooner than we think.

Gidi Argov, Founder and CEO

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6 Responses to “iPhone might bypass the credit card associations”

  1. Danny says:

    Will NFC technology be added to the upcoming iPad 2 as well?

  2. Jack says:

    No one knows for sure, yet most chances are that if NFC technology will be added to the next iPhone generation, it will most likely find its way into the iPad 2 as well.

  3. Scott says:

    What is NFC all about and how does it enable an iPhone device to perform payments on a retailer point of sale?

  4. CCPrUs says:

    Near field communication (NFC) enables data exchange between proximity devices using short-range high frequency wireless communication technology.

    As NFC technology is an extension of the existing proximity-card standard, once adopted and added to Apple’s next generation devices, it enables an iPhone or iPad device to communicate with existing POS terminals, same way RFID cards transmit card data today.

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  6. Jim says:

    Though Apple closed loop processing is indeed a possibility when adding NFC technology to Apple’s next generation devices, most chances are that, at least initially, majority of transactions processed, would be processed through Visa, MasterCard and other card associations.

    Apple bypassing the credit card associations (in specific closed loop transactions) does not materially change the market power of the associations and the way we pay!

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