Apple is said to be developing a “smart” wristwatch that includes mobile payments functionality, according to a report by The New York Times.

The watch would operate on Apple’s iOS mobile operating system and “could also be used to make mobile payments, with Apple’s Passbook payment software,” reads the Times report, which cites unnamed sources familiar with Apple’s “explorations.”

While Samsung and other smartphone developers that use Google’s Android operating system have embraced Near Field Communication, Apple’s decision to leave NFC chips out of the iPhone 5 was a move met with both praise and criticism.

Instead, Apple launched Passbook, a software-based mobile wallet that stores payment cards and tickets from other mobile apps and relies on quick-response bar codes for redemption.

The device is said to utilize curved or bendable touchscreen glass developed by Corning, the same company that makes the strong Gorilla Glass used on Apple’s other mobile devices. The report raises a number of questions about the capabilities of an Apple smart watch, such as integration with Apple Maps, text messaging and the ability to monitor users’ vital signs and daily activity.

Reports of the hypothetical Apple “iWatch” instantly elicits visions of Dick Tracy’s “2-Way Wrist Radio,” a watch the comic book detective used to communicate with his police department’s headquarters—and later manufactured and sold as a children’s toy—but it wouldn’t be the first payments-enabled watch. U.K.-based Watch2Pay offers a device that incorporates technology to enable MasterCard PayPass contactless payments with a wristwatch and has brought the device to the U.S. through a partnership with TransCard.

And it’s not the first time the notoriously secretive nature of Apple’s product development has garnered speculation about a variety of payments-related rumors. Soon after the release of the iPhone 5, some industry observers suggested that an NFC chip would be included in the next iPhone release. There has also been speculation that the Passbook technology would be expanded to include limited payment capabilities (a rumor that later proved true) while other developments—like expanding Apple’s iTunes database into a payment and loyalty program—have yet to materialize.

In the meantime, Isis, the NFC-based mobile wallet initiative launched by a consortium of wireless carriers, has promoted Incipio’s development of an NFC-equipped iPhone case, a device that was created for iPhone 4 and 4S models, but isn’t expected to support the Lighting Port connector on the iPhone 5 until a second generation model is released. And U.S. Bank has introduced a similar NFC iPhone case for its bank customers.

In addition, Merchant Customer Exchange, the merchant-led mobile wallet effort, recently announced its intention to bring to a market a cloud-based wallet that uses QR codes, a strategy MCX says allows it to garner widespread adoption, while also remaining flexible to adopt new technologies as they become more widespread.

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