Apple Pay's next move could be phone-to-phone payments

The NFC standard supports it, but payment software hasn't enabled it yet

A payment terminal with an NFC payment logo compatible with Apple Pay and Google Wallet

A payment terminal with an NFC payment logo compatible with Apple Pay and Google Wallet

The launch this week of Apple Pay is giving many people their first taste of NFC payment technology, which allows them to buy things in a store by bringing an iPhone 6 close to a compatible terminal.

But the NFC standard also allows payments to be made directly between smartphones. Apple and its competitors, such as Google Wallet, don't offer support for that part of the standard, but the technology already exists inside many of today's NFC-equipped phones and could one day allow retailers to accept NFC payment using smartphones. It would also be technically possible for individuals to exchange money with their friends through the same system.

The NFC standard defines three modes for the technology.

The first, and most simple, is for reading small snippets of information such as phone numbers or Web addresses from wireless tags. The second, used by Apple Pay and Google Wallet, involves the phone emulating an NFC payment card. The third allows the NFC chip to function as a card reader.

It's this third mode, if enabled by Apple or Google, that would allow a smartphone to accept payments.

Smartphone payment systems are already common in some countries. Perhaps the most famous and recognizable is the Square system, which uses a small magnetic stripe reader that plugs into a phone's headphone jack. In Europe, some companies offer card readers for more secure chip-based payment cards, but nothing exists yet for NFC.

"We've been working on it at Mastercard for a little while," said James Anderson, the company's senior vice president of emerging payments. "We're interested in turning every phone into a payment acceptance device."

But while many of the NFC chips used in smartphones support it, not every phone could necessarily be used to accept payments.

There are a number of requirements for NFC payments, such as the minimum and maximum distance over which the NFC transaction can take place and the speed with which it happens. Terminal manufacturers design for these requirements, but not all smartphones have necessarily been built with these in mind.

"There may be situations in which the two devices may technically be capable of exchanging data for payment, but may not be able to achieve the read ranges and/or response times required for them to be certified as contactless payment capable," said Sam Shrauger, senior vice president of digital solutions at Visa.

For now, the industry is watching closely to see consumer reaction to Apple Pay. If it takes off, competitors such as Google would probably step up their offerings and the NFC payments field would become a lot more competitive. That might bring new features such as phone-to-phone payments into play.

Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags retailsmartphonesAppleiPhonefinanceconsumer electronicsindustry verticalsvisamastercard

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Martyn Williams

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?