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Mobile Payments may be a big part of the next iPhone


As we laid out earlier today, it seems that the stars are aligning in such a way as to make Apple's upcoming September event the company's biggest and most impactful event in years.

In addition to new iPhones and swirling reports of a new type of wearable device, one rumor that's been picking up steam in recent weeks centers on Apple entering the big bad world of mobile payments. Now the ability to make mobile payments is of course nothing new, but none of the the implementations introduced by a myriad of companies over the years have ever gained mainstream traction. To that end, perhaps Apple will be able to usher mobile payments into the mainstream in the same way that they revived a tablet market that was previously DOA.

So without further ado, below are a few pieces of compelling evidence which suggest that a mobile payments announcement from Tim Cook and co. may just a few days away.

Earlier this week, Wired reported that Apple's upcoming iPhone will feature a mobile payment system reliant upon NFC functionality.

The company's next iPhone will feature its own payment platform, sources familiar with the matter told WIRED. In fact, that platform will be one of the hallmark features of the device when it's unveiled on September 9. We're told the solution will involve NFC.

And just yesterday, the well-connected John Gruber not so subtly hinted that mobile payments will be on the agenda come September 9.

I've been working on a new joke - about NFC and a new secure enclave where you can store your credit cards, so you can pay for things at brick and mortar retail stores just by taking out your iPhone, but only if it's one of the new iPhones - but no one seems to get my sense of humor.

Follow-up joke: It would be cool, and would make a lot of sense, if the new wearable thing had the same magic payment apparatus.

The "joke" reference is in regards to Gruber previously stating that Apple would release a wearable device in September, only to claim later on Twitter that it was a "joke." Of course, with Re/Code yesterday reporting that a wearable device will be announced at Apple's upcoming media event, Gruber's "jokes" are worth paying attention to.

It's also worth highlighting a July, 2014 report from Amir Efrati of The Information which claimed:

Apple has told some partners its [mobile payments] system would involve a so-called secured element in the phones-a piece of hardware where sensitive information such as a phone owner's financial credentials can be stored. The company also aims to run the system without giving up any control to wireless carriers.

Some more evidence to consider:

Well for starters, Tim Cook hasn't exactly been shy about expressing Apple's interest in mobile payments. During an April 2014 interview with the Wall Street Journal, Cook explained:

I think it's a really interesting area. We have almost 800 million iTunes accounts and the majority of those have credit cards behind them. We already have people using Touch ID to buy things across our store, so it's an area of interest to us. And it's an area where nobody has figured it out yet. I realize that there are some companies playing in it, but you still have a wallet in your back pocket and I do too which probably means it hasn't been figured out just yet.

And it sure is interesting that Gruber references the secure enclave first introduced with the iPhone's Touch ID feature; You might recall that Tim Cook a few months ago flat-out said that mobile payments was one of the thoughts behind Apple implementing fingerprint authentication on the iPhone in the first place.

"The mobile payments area in general is one that we've been intrigued with," Cook explained during an Apple earnings conference call. "It was one of the thoughts behind Touch ID."

Now in order for consumers to trust Apple, or any company for that matter, to handle mobile payments, a whole lot of trust is required.

And therein lies the beauty of Apple's slow and methodical approach to product innovation.

With last year's rollout of Touch ID (and its accompanying secure enclave), Apple was able to demystify a feature that previously resided, almost exclusively, in the purview of science fiction and gadget geeks with a penchant for technical bells and whistles.

Now that consumers have had a year to get used to using their unique fingerprints as an access point to the iPhone, the next logical step is to get consumers used to using that same fingerprint (again, safe and sound in the secure enclave) to make mobile payments right from their device. Today, the notion of using one's fingerprint to make mobile payments is a lot less daunting than it was even 9 months ago.

There have also been a few alleged leaks of iPhone schematics and logic boards which purport to show the inclusion of an NFC chip. While such leaks are typically great fodder for our Rumor Roundups, they arguably carry more weight than usual given all of the circumstantial evidence cited above.

Furthermore, the Financial Times today is reporting that Apple has been working with NXP Semiconductors (a supplier of NFC chips) to help implement a wireless payment system. Note that the Financial Times report was co-authored by Tim Bradshaw who was the first person to break the "Apple is buying Beats" story a few months ago.

Apple is working with Dutch chipmaker NXP to add secure short-range wireless technology into the next iPhone, enabling new pay-by-touch capabilities in the latest bid for the smartphone to replace the wallet.

Several people familiar with Apple's plans say NXP will provide the secure near-field communications chips that will allow an iPhone to connect with payment terminals or ticketing systems, as well as opening up the possibility for other applications in the "internet of things".

Also, Apple has a number of employees with notable experience in the mobile payment space.

Some examples include Mehdi Ziat who specializes in, amongst other things, NFC and mobile payments. Prior to joining Apple in March 2012, Ziat worked as an embedded security architect at, surprise surprise, NXP Semiconductors.

There's also Raghu Battula who joined Apple as a Senior Software Engineering Manager this past January. Prior to that, Battula spent almost two years as PayPal's Mobile Wallet Engineering Leader. Battula describes his work at PayPal as follows:

Lead Mobile Wallet Development teams on iOS, Android and Windows phone platforms. Built revolutionary payment apps used by millions of users across the world.

Battula also holds a few patents relating to secure mobile payment transactions.

And there are also a smattering of current Apple employees who spent time at companies like American Express working on digital wallet centric projects.

And last but not least, Apple a few years back hired Benjamin Viger, an NFC expert with years of deep NFC experience. Near Field Communications World reported at the time:

Benjamin Vigier has been working on NFC technology since 2004 and has been responsible for NFC activities at both French mobile network operator Bouygues Telecom and flash memory manufacturer Sandisk.

Most recently Vigier was product manager for mobile wallet, payment and NFC at US mobile payments specialist mFoundry. There he conceived and managed both the PayPal Mobile service and Starbucks' barcode-based mobile payments service and was also responsible for the development of mobile wallet applications for two top US mobile network operators and an NFC wallet application for a top three US bank.

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