Apple could cause some serious disruption in the mobile payments space if it enters the field as reported, say analysts.
Reports noted earlier this week that Apple is planning to embed Near-Field Communications (NFC) technology into its next-generation iPhones and iPads. Such NFC-enabled systems would let users pay for purchases by waving their mobile devices near payment terminals.
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Similar contactless payment technologies have been around for years and have been received with lukewarm support at best by consumers. What's likely to make Apple's entry into the space vastly different, however, is its huge base of 160 million iTunes users, said Avivah Litan an analyst at Gartner.
That base gives Apple the ability to operate largely as a "closed payment system" with minimal need to interface with credit card companies and banks, she said. "They can largely shut out credit card companies if they choose to," and operate in much the same way that PayPal has done in the virtual world, she said.
iTunes users will probably need to continue using their credit cards and bank accounts to fill up their iTunes accounts, but that could be the extent to which these financial institutions will be involved in an Apple mobile payment system.
"I see Apple as being a PayPal on steroids," Litan said.
Apple's rumored plans in the mobile payment space come at a time when interest in NFC appears to be ramping up. Last November, AT&T Mobility, Verizon Wireless and T-Mobile USA announced a project called ISIS under which they are working with Discover Financial Services and Barclays to introduce an NFC-based mobile payment system in the United States.
Google added NFC capabilities with its Nexus S Android smartphone made by Samsung and even PayPal has begun partnering with companies such as Bling Nation in an attempt to let consumers use their PayPal accounts when making mobile payments at physical locations.
Such moves signal the seriousness with which large providers are approaching mobile payments, said Gwenn Bzard, an analyst with the Aite Group. The big advantage that Apple has in this increasingly crowded space is that it already is a processor of mobile payments, Bezard said.