Tag Archives: nfc

Apple’s about to end the age of the credit card

The standard if slightly lazy shorthand you see online when Apple starts to hype an event is: “OK tell me this: what’s so interesting about this product? Samsung/Sony/Rio/whoever already sells this. Apple customers = sheep.”

And I understand it. Computers existed before the Macintosh; MP3 players before the iPod, phones before the iPhone, and so on. We’ve all been over this a thousand times. It should be clear to anyone with a balanced viewpoint that Apple rarely creates entirely new product lines (in the global sense, I mean). Rather, it observes trends and identifies ways to create exciting new products which people will want to buy, generally with one or two exclusive features – a novel UI, for example, which place the Apple product ahead of the rest.

For the last couple of years, the rumor has been that Apple would release some sort of wearable device. Most likely a watch. I reckon that Apple allowed this puff of smoke to escape, fully aware that its prime rivals, Samsung (a company which really is less innovative than Apple), et al, would rush products to market in an attempt to preempt Apple’s big reveal. And if I’m right about that, it means that the competition has played into Apple’s hands.

Because none of the smartwatch products currently on the market has mass appeal. But they do have market presence, which means that Samsung, Motorola, LG and others have helped Apple with a bit of real-world market research. They’ve made the mistakes. And none of them have realized that they’re missing one key ‘killer’ application.

Yesterday’s confirmation by the WSJ (when the story is in the WSJ 5 days before an Apple press event, it’s 99% a confirmation) that Apple’s iWatch (or whatever) will include a Near Field Communications (NFC) chip for payments, is by far the most important fact we think we know about the product.

It just so happens that I work in a lab that tests payment systems. So although I’m no expert, I know a little bit about some of the technology involved. And it’s public knowledge that while the payment schemes (Visa, MasterCard, Amex and Discovery) would like us all to use our phones to pay in stores, only 1% of all transactions in the USA are made this way. Which is kind of strange when you think about it: all these people with their Samsung Android NFC-enabled phones ready to use Google Wallet as a mobile payment system, and yet nobody’s using it.

Part of the problem is probably that people don’t see other people using it. These things need a mass of users in stores and coffee shops to get moving. The other part of the problem is that if you need to get your phone out of your pocket or bag just to pay, well you may as well use your contactless credit or debit card as that’s no less convenient and it probably feels safer (more ‘official’).

Which is why Apple’s adoption of NFC in both its phone and its smartwatch is so important. Apple spotted one critical, ubiquitous technology that – in form factor if not in technology – has remained the same since the 1960s. The credit card is a dinosaur. Visa/MasterCard/EMVCo. know this. They’ve been trying to get people into mobile payment systems for years. But people don’t much listen to Visa, MasterCard or EMVCo. They take the card and payment scheme their bank gives them.

People do listen to Apple. Apple has hundreds of millions of generally satisfied customers, many of whom have already given Apple their payment details. And when Apple makes it clear that they have a product which allows for quick, secure payments, ┬áplenty of people will take the plunge. And then, sometime next spring, other consumers will start to see them paying for their groceries and their morning coffee using just their wristwatch. And the beginning of the end of the credit card will have begun – with the explicit support of the very banks and payment schemes which introduced it.

It’s highly likely that in a couple of years, I’ll at the very least be leaving my credit and debit cards at home when I go out. Probably my wallet too (although I suppose I’ll need some identification, so wallets may live on for a while). And a couple – maybe four – years after that, I’ll be wondering whether I should keep my expired cards for posterity. Because they won’t be replaced.

That’s what Apple will announce on Tuesday. If you can’t see how significant this product will be, well go and comment about it on some website, I guess.