There is still more talk than action around mobile payment systems that use near field communication chips, leaving plenty of opportunity for so-called bridge technologies.
Apple has investigated many methods of using its iPhone for point of sale payments (see story), but has yet to offer an iPhone with an embedded NFC chip. Even Google, which has been promoting NFC-based payments for a year, supports just four phones equipped with the necessary hardware.
To add a payment capability, several companies have developed sleeves that act as high-tech cases for iPhones and other devices. Others use memory cards with a built-in NFC chip. Neither idea is new, but they have fresh appeal as more consumers and merchants grow comfortable with the idea of using a phone for payment.
Payment sleeves and chips are "following in line after the plug-in card readers from Square or Intuit," which offer devices that let phones accept magnetic-stripe card payments, Brian Riley, senior research director and analyst with Needham, Mass.-based TowerGroup, tells PaymentsSource.
DeviceFidelity Inc. of Richardson, Texas, announced last week that it would offer an NFC-enabled case for iPhones. In addition, Portland, Ore.-based Tyfone Inc. on May 21 announced patents for software that is needed to miniaturize a NFC antenna for use in mobile environments (see story).
These back-to-back announcements triggered speculation that more phone cases and sleeves will eventually have contactless payment capabilities.
"DeviceFidelity has been around for some time, so it is good to see good trade names involved in developing this technology," Riley says.
Still, an iPhone case with an NFC antenna lacks the "juice" it will need to gain wide-ranging acceptance, Riley contends.
"It's definitely a technology in need of a solution, and any new sort of sleeve technology likely won't be" compatible with the EMV chip-card standard "right away," he says.
The payments industry is experiencing the "very early development" of these NFC devices, making it difficult to predict how consumers and merchants will accept them, Gil Luria, analyst with Los Angeles-based Wedbush Securities, tells PaymentsSource.
However, Luria says he expects development of these mobile-payment products for card swiping and NFC contactless to continue through the rest of this year.
"The industry goal in the next five to 10 years is to have NFC capabilities on all mobile devices and point-of-sale terminals," Luria says.
Until then, consumers are going to continue to swipe cards with magnetic stripes, he adds.
"What DeviceFidelity is developing is an intermediate step in that process for phones that don't have NFC now," Luria says. "It will be very helpful as NFC migrates to more devices."
In January, DeviceFidelity cut a deal with Spring Card Systems to create the Moneto mobile payment application that works with the DeviceFidelity microSD card and communicates with MasterCard PayPass contactless cards at point of sale terminals (see story).
The new DeviceFidelity case, called the In2Pay iCaisse4X NFC, provides consumers with options for making contactless payments to retailers or person-to-person payments, a DeviceFidelity spokesperson tells PaymentsSource.
While DeviceFidelity mostly sells to consumers, retailers and merchants can purchase its cases and give them to customers as a value-added item, the spokesperson said.
A merchant providing a customer with an NFC-enabled phone case could send coupons and other important messages using the phone, the spokesperson said.
In addition, retailers can establish payment-acceptance capabilities using the phone cases, but would need additional software applications to do so. DeviceFidelity will offer its case to consumers in early June, the spokesperson said.
As for Apple, the company does not appear to be in any hurry to announce its own NFC-based phone, Riley says.
"Apple doesn't have a real perspective on payments and hasn't really 'culturized' how important it is," Riley says. "There is no urgency for Apple to develop a payments technology."
More likely, Apple will wait to see which payment technology takes hold — and then it would buy the company behind it, Riley says.
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