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Will Apple Pay Widen NFC and Mobile Payment for Consumer Electronics?

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Today marks the first day that Apple's Apple Pay goes live and there are industry hopes that with this leading OEM having paved relationships with major corporations (financial, retail, services, etc.), Near Field Communications (NFC) will finally take off.

The long road for NFC

It was back in 2011 when we pondered out loud in Smith Market Blog whether or not NFC was going to have a break-out year in 2012. Obviously, that didn't come to pass. This year, we've seen smartphones equipped with NFC supporting components (RF controllers, antennae, etc.): Samsung's spring release of the Galaxy S5, and last month with Apple's fall release of the iPhone 6 and 6Plus. Of course, there's also been Google Wallet, among other recognized mobile payment service providers.

Why might it be different this time for NFC? Importantly, this year in North America there have been a number of high-profile security breaches through in-store credit card payment terminals that have served very detrimental PR events to major retail chains and caused tens of thousands of people time and problems dealing with card changes, etc. Apple has worked with over 500 financial institutions (banks, credit unions, and similar) and over 220,000 retail locations including giants like McDonald's, Whole Foods, Walgreen stores, among others, as reported today by The Wall Street Journal.

Why now?

Apple Pay is holding the hopes of the industry and Wall Street because of the high profile that Apple holds and the network that it has worked hard to create. Of course, there are likely to be glitches and problems to start, but the opportunity to (FINALLY) have a break through event for NFC and the wider payment industry. Whether Apple Pay can succeed where Google Wallet and Samsung Galaxy S5 haven't, will be the test for Apple.

One of the advantages this time around for NFC is the increased security and speed now available as a result of the improved components in more highly sophisticated smartphones than we saw just a couple of years ago, as discussed in this recent Smith Market Blog. Additionally, the blow to major retailers with the hack of their point-of-sale terminals has certainly primed both retailers and consumers into looking for a new payment services option.

Watch for the latest Smith MarketWatch Quarterly coming to subscribers (free subscription) this week; our latest issue includes detailed discussions of the direction of consumer electronics and component demands as well as the impact of these demands on the global supply chain.


Lisa Ann Cairns, Ph.D.
Written on Monday, 20 October 2014 13:35 by Lisa Ann Cairns, Ph.D.

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