The pace of innovation in mobile payments may slow in light of Apple Inc.'s favorable $1.05 billion verdict in a patent lawsuit against Samsung Electronics Co. over mobile phone technology.
Apple's victory pertains to smartphone technology and product appearances. Neither company is doing much in mobile payments yet, but Apple has already stockpiled a number of patents detailing various mobile-payment schemes.
Any manufacturer "who is not Apple" will be extremely cautious with technology development now because "Apple can always come to court with that patent win in its hands," says Richard Oglesby, senior analyst and mobile pay expert with Boston-based Aite Group.
"The biggest impact from the patent ruling will be a slowdown in mobile payments technology," Oglesby says.
Such a scenario plays right into the longstanding belief that Apple would ultimately dictate whether Near Field Communication technology becomes the method of choice for mobile payments, he adds. As Apple nears its next product announcement, more rumors are spreading that the next iPhone will have an NFC chip for payments.
"It puts the future of NFC more into Apple's hands than ever before, and that's not necessarily a good thing for NFC because you want other companies to also be developing technology," Oglesby says.
For much of the past year, industry analysts have speculated on Apple's potential moves in mobile payments — with deployment of NFC, or lack thereof, at the forefront.
"Patent claims don't mean much until one company has generated meaningful sales volume," says Richard K. Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC.
Apple sued Samsung for technology and design infringement because Samsung has established itself as a market share leader in smartphone sales, but neither company can so far claim to be a leader in mobile payments, Crone adds.
Apple's decisions carry more weight today than they did prior to the court ruling, says Gil Luria, industry analyst with Los Angeles-based Wedbush Securities. He doesn't see mobile payments technology taking a back seat.
"Other companies are going to have to invent something that goes beyond the current technology and goes beyond the rectangle-with-rounded-corners shape [of the iPhones and iPads]," Luria says.
Depending on what Apple has ultimately decided for a mobile wallet, NFC is at a crossroads, Oglesby says.
It could very well be that NFC plays no part in the dominant mobile payment process. PayPal Inc. got a strong boost for its cloud-based digital wallet when it partnered with Discover Financial Services, and Square got a similar boost with its recent investment from Starbucks Corp., Oglesby says.
"With those two deals, all of the sudden there are 7 million merchant locations accepting cloud-based wallets, whereas only 250,000 merchant locations are set up to accept NFC payments," he says.
Apple's patent disputes with Samsung date back to 2010 when Samsung first released its Galaxy smartphones.
Apple requested up to $2.75 billion in damages and could see more than the jury's award handed down by the presiding judge, U.S. District Judge Lucy Koh.
Koh also reportedly will consider Apple's request that Samsung not be allowed to sell its smartphones in the U.S., according to published reports.
Representatives for Apple and Samsung did not provide comment for this story by deadline.