Apple is planning to add near-field communications (NFC) chips to its next generation iPhone and iPad, allowing you to use them to pay for stuff just by waving your device in front of a receptor. [Bloomberg]
This is, of course, absolutely huge. We've been waiting ten years to be able to use our phones as a wallet. Unlike workarounds using bar codes like Starbucks or dongles like Square, with NFC the payment would just happen wirelessly and automagically once you approve it.
Google has also been dabbling in NFC for its Android phones, but Apple's decision, if confirmed, is huge news for a few reasons.
First: if it's on iPhone 5, it will be on zillions of phones overnight. The reason NFC hasn't worked before is because it needs critical mass on the consumers side before merchants will start accepting it (and of course consumers won't care about NFC until merchants take it, which creates a catch-22). Being on iPhone 5 would go a long way toward solving that.
With Android, who knows when and if manufacturers and carriers will adopt a new direction Google is taking, and if they'll all do it in a consistent way. But if NFC is baked into iPhone 5, which no one doubts will be a huge seller, that would mean millions of devices, all using the exact same software and standards, in the market, practically overnight.
Second: iTunes. Apple already has your credit card info and your purchase info. And they know a thing or two about designing pleasant experiences. That would make using NFC as painless and as easy as possible for conusmers as it should be. "Painless payment" isn't exactly something you can say about Android yet.
Obviously this wouldn't just be a huge win for consumers but for Apple as well. Apple can try to start taking fees from transactions and maybe even sidestep credit card companies, which is hugely disruptive and exactly what we need. They can also offer merchants to take over their loyalty programs, another idea which has been long in the making and could potentially make lots of money. And with customers' purchase histories, Apple could target iAds much better.