iPad 2, iPhone 5 to include NFC, Apple to become massive money machine?

iPad 2, iPhone 5 to include NFC, Apple to become massive money machine?

Bloomberg citing an analyst citing "engineers who are working on hardware for the Apple project" reports that Apple will be including NFC (Near-Field Communications) technology in their upcoming iPad 2 and iPhone 5 product revisions, along with the killer iTunes Store transactional system to back it up.

The main goal for Apple would be to get a piece of the $6.2 trillion Americans spend each year on goods and services, Crone said. Today, the company pays credit-card processing fees on every purchase from iTunes. By encouraging consumers to use cheaper methods -- such as tapping their bank accounts directly, which is how many purchases are made via PayPal -- Apple could cut its own costs and those of retailers selling Apple products.

NFC is an RFID-related technology that allows for secure, close range data transfer including but not limited to payment information. Google has already begun including NFC in their Nexus S Android handset though they lack an iTunes-like infrastructure with millions of active, international users to bolt it onto. Similarly traditional credit card companies and other online checkout systems like PayPal lack incredibly popular consumer electronic devices as front ends.

The report also claims Apple is exploring loyalty/rewards/referral programs, tying in iAds to NFC data, and even offering subsidized or free processing terminals to small retailers to blow out deployment.

While not all of this may turn out to be accurate or true, if Apple can accomplish an NFC front end to an enhanced iTunes payment system it could redefine yet another industry and potentially its largest ever.

Are you ready for a future that's cash, credit, or iTunes?

Have something to say about this story? Leave a comment! Need help with something else? Ask in our forums!

Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

iPad 2, iPhone 5 to include NFC, Apple to become massive money machine?


I was initially against this kind of thing for security reasons, but if this feature could be turned on and off as needed, it would actually be safer than carrying a radio card in your wallet that can be scanned by any passerby with the right equipment. So I may like this.

Having a Nexus S myself, I can say (at least with Android's implementation) the option can be turned on and off. And if Japan has been using it for a decade or more with no serious problems, I'm sure security isn't much of an issue.

I don't get the "be everything" mentality of companies these days. The more Apple diversifies, the weaker each individual product becomes. Thus far, it isn't hugely noticeable - but as it stacks up it will become that way.
Is Apple wanting to be like Taco Bell in Total Recall?

uhhh sounds stupid. NFC is supposed to be like a credit card. Just one way of accessing your bank account. Theres no point in trying to tie it to itunes because itunes doesn't even exist in the real world. You just click buy and youre done. NFC is for REAL WORLD transactions.

Yea but if you could link the NFC to your iPhone banking app, then a person could use there phone as a credit card.

This sort of thing shouldn't make anyone but Apple excited. How is it easier to wave my iPhone over a receiver than swiping my bank card? It's just like the stupid "blink" feature on Visa cards. I never use it because it's not easier.

I think the implementation of NFC is a bit better than Blink.
I get what you saying though, because two jobs I worked at used Blink and it was dumb (except for the American Express version). Every other one had you tap it...but you still had to do prompts and sign for it.
I think NFC will be like the AX version...where once you tap it, you're good to go. And it being tied to your phone...well in this day in age, who ISN'T carrying around a phone? So it's inherently easier to snap it off your clip and scan rather than pull out your wallet/purse, card, swipe, make sure you put your card back, and so on and so forth.

It just seems to me like a ploy to get a piece of Visa/Mastercards cut and companies are selling to the public like it's going to be so great.

Well...that's exactly what it is, lmao.
But it is a simpler way of doing things in a phone-centric world also.
I would say as long as it doesn't cost us, then it's all good. But seeing as only Nexus S owners (which me number in the VERY small minority) are the only ones with that tech...it will cost for everyone to get in on it...so eh. :(

Depends on how it's implemented.. if swiping my phone with NFC chip means getting the receipt automatically sent to my phone . . that would be perfect for business transactions especially.

Rene...this iTunes addictions is all good...but I think you forget one thing to have "unity" amongst other NFC providers.
Google has Google Accounts, or better specified, Gmail. Millions upon millions. SImply log in with that and you're tied into whatever NFC system they wanna use.
PayPal has the access of apps. Seeing as the NFC feature will be dependent on hardware anyways...PayPal will have access to both Android, iOS, and whoever else implements this.
A last option (although I would hope it never does happen) would be to simply have the carrier host it also. But that would be a horrible mess. Blah!

No. I'll pass, and I agree that Apple is trying to diversify too much (Ping, anyone?). A little diversification is fine, and necessary, but they seem to want their finger in every orifice now and it's hurting their focus.

Very nice, i really liked reading this article and thanks for sharing it !!
I have been through with another blog which was about the same news; if you are interested so you can visit that blog as well... it was http://www.imakerz.com/blog

Lol...... Maybe people should try that blog. - people may learn to appreciate Tipb more. Was the blog auto translated from another language? The grammar felt ..... Weird!

I don't know of any company with NFC/RFID already in use other than gas stations and Best Buy in the US. My debit card has this and I don't find it any more/less convient than just swiping the magnetic strip like we have been doing.
Having to worry if this NFC stuff is turned off on my phone to be protected from pocket scanners in crowds is a hassle I do not want or need. Seems un-Apple to introduce something we have to think about it.

Oh yea and having something like this tied directly to my bank account is the last thing I want. Credit/Debit cards off another layer of fraud protection that many people want.

I agree with you really. I don't need to have to worry about losing my phone or something like that and thus losing my bank account with it. I'm fine pulling my wallet out and swipping my card for transactions like I have been doing for years and years.

come on people .. enough...
how is it any different than losing your credit card? if anythign it's even better. you can always set some of password protection on ur phone if that worries you...you can also kill your phone quicker than you can cancel your credit card..
so how is it any worse?

The on and off problem could easily be remedied by having it set like BT discovering. You can quickly and easily turn it on. You forget to turn it off, it cuts off after a set amount of time.
But as I stated earlier, if it's been used in Japan for this long...there has to be more security to it than we're seeing.
I'm going to have to look more into this.

Well a bit of Google'n and these are the perceived aspects of security problems that could present itself:
NFC offers no protection against eavesdropping and is also vulnerable to data modifications. Applications have to use higher-layer cryptographic protocols (e.g., SSL) to establish a secure channel.
The RF signal for the wireless data transfer can be picked up with antennas. The distance from which an attacker is able to eavesdrop the RF signal depends on numerous parameters, but is typically a small number of meters.[13] Also, eavesdropping is extremely affected by the communication mode. A passive device, which does not generate its own RF field is much harder to eavesdrop on than an active device. An Open source device which is able to eavesdrop on passive and active NFC communications is the Proxmark instrument.
Data modification
Data destruction is relatively easy to realize. One possibility to perturb the signal is the usage of an RFID jammer. There is no way to prevent such an attack, but if the NFC devices check the RF field while they are sending, it is possible to detect it.
Unauthorized modification of data, which results in valid messages, is much more complicated and demands a thorough understanding. In order to modify the transmitted data an intruder has to deal with the single bits of the RF signal. The feasibility of this attack, i.e., if it is possible to change the value of a bit from 0 to 1 or the other way around, is amongst others subject to the strength of the amplitude modulation. If data is transferred with the modified Miller coding and a modulation of 100%, only certain bits can be modified. A modulation ratio of 100% makes it possible to eliminate a pause of the RF signal, but not to generate a pause where no pause has been. Thus, only a 1 which is followed by another 1 might be changed. Transmitting Manchester encoded data with a modulation ratio of 10% permits a modification attack on all bits.
Relay attack
Because NFC devices usually include ISO/IEC 14443 protocols, the relay attacks described are also feasible on NFC.[14][15] For this attack the adversary has to forward the request of the reader to the victim and relay back its answer to the reader in real time, in order to carry out a task pretending to be the owner of the victim’s smart card. One of libnfc code examples demonstrates a relay attack using only two stock commercial NFC devices.
Lost property
The very simple problem of losing the mobile phone and therewith opening access to any finder of the property is not addressed. Either the NFC RFID card or the mobile phone will act as a single-factor authenticating entity, beyond the fact that the mobile phone is protected with the PIN code, again as a single authenticating factor. Hence the basic way of defeating the lost-property threat requires an extended security concept including more than one physically independent authentication factor.
Walk off
Once lawfully opened, access to a secure function or data is usually protected by time-out closing after a period of inactivity. Modern attacks may succeed, despite provisions to shut down access when the user turns inactive. The distance of a successful attacker to the locus of lawfully granted access is not addressed with any of the described concepts

If it's as easy to use as my current credit card and as safe or safer, then I'm all for it. I could stop carrying the two credit cards I tote around. To me, it's all about pocket bulk ;)
But if it's four on-screen prompts followed by a confused Jewel employee like CardStar, then I'll pass.. I don't really see how it could become mainstream enough to let me ditch my cards successfully.

NFC = National Football Conference to me. This other stuff, what's that about? Boring. When vending machines, fast food joints, stores, basically a lot of places, I'll think about it. Today, boring. NFC on the hand. Love the hysteria in Chicago!

I wonder if that will legally make Apple a "bank". For example, will they have to be regulated by the Fed/Treasury?

Anything that scares Visa, MasterCard and Paypal is good news. Those companies are in need of having some fresh competition.

you guys are acting as if credit cards are any safer..
the most important thing is to get a provider who offers protection against fraudulent charges... all my credit cards have had that.. so I'm all for this technology

I think it was from Wired or something, but part of the reason why iTunes is so financially viable/affordable is that unlike other creditors who charge per transaction, iTunes normally aggregate transactions so that the credit card transaction cost is drastically lower.
If Apple and or iTunes can transfer this kind of aggregation for other retail use, those other retailers could have big gains.

Why yes I am! Of course there will be consumer protection, including FDIC insurance for Apple...Bank...
Apple Bank! That sounds right. I'll have my desktop, cell phone, tablet, TV and newspapers all through Apple and why wouldn't I want to just do an auto-pay so that my Apple Bank checking account automatically pays for all of my (Apple) products and services? It would only make sense. In fact, I want Apple for President and so as to stop all the bickering in DC, Apple for both Houses of Congress. We could put the iMac on the $5 bill, the Magic Mouse on $10, Mac Pro goes on the $100 and let's not forget the founder, on the $1, the #1 man of the millennium, Steve Jobs.
I'm for it! No, really! :D