Apple Inc.'s acquisition of a small semiconductor company has given fresh credibility to rumors that the technology giant is planning a 'smart watch' that could perform contactless payments.

Apple will purchase Oakland, Calif.-based Passif Semiconductor Corp. and its patents, Bloomberg News reported Aug. 1.

“Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans,” Amy Bessette, a spokeswoman for the Cupertino, Calif.-based company, tells Bloomberg News.

Bloomberg and other sources credit former Wall Street Journal reporter Jessica Lessin with breaking the news yesterday and getting Apple, notoriously secretive about its business dealings, to confirm the acquisition.

Rumors of Apple developing a smart watch, or iWatch, that would include mobile payment functions first surfaced in February.

Technology bloggers speculate that Apple's move to acquire Passif will quickly address an issue Apple was said to be encountering with the short life of a battery it was testing for the smart watch.

In addition, Passif's patent for low-power Bluetooth connectivity is a means to support low-cost payment systems as a complement to Near Field Communication technology or in lieu of it.

If Apple follows this course, it would not be the first company to dive into mobile payments through watches or bracelets.

TransCard LLC and Watch2Pay LLC announced an agreement in January to offer a mobile payment watch with MasterCard PayPass chip technology in the U.S.

Late last year, Nathan Performance and Visa Inc. developed a contactless payment wristband designed for athletes, particularly runners or bikers traveling long distances.

Hershey Park experimented with — and dropped — a payment wristband due to poor adoption, but Disney World rolled out 'MagicBands' for its own patrons.

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