iPhone 5 Prototype Spotted with NFC Chip: Why it Could be a Big Deal

By Anu Passary , Jun 26, 2012 02:42 PM EDT

While competition is still steadying itself from Apple's last onslaught, the tech biggie has decided to one-up its rivals with yet another revolutionary offering. A recent report indicates that the eagerly awaited iPhone 5 may well adopt the NFC technology. 

The report by 9to5Mac claims that codes extracted from prototype handsets reveal that the inclusion of NFC chips and antennas by Apple in its next smartphone is likely. Additionally, Apple has been granted NFC-related patents and the patent illustrations reveal an e-wallet icon.

Near Field Communications or  NFC is a wireless technology, which has a range that spans only several inches and allows contact-less payments, courtesy its compatibility with various ID card terminals around the world.  This technology is widespread in Japan, but the U.S. is yet to embrace it.

If Apple incorporates this feature in its forthcoming devices, the NFC integration would lay the platform for competition with Microsoft's recently announced NFC wallet service for Windows Phone 8 and Google Wallet. Moreover, the technology would radically alter the way mobile payments are made and make them mainstream. In such an event, the concept of e-money would take centerstage, ultimately obliterating the need for tangible currency in the long term.

Earlier this month, Apple had unveiled an e-wallet app called "Passbook" for iOS6. Due for a fall launch, the application allows users to store the e-version of movie tickets, airline tickets, retail coupons, and loyalty cards. Barely a few weeks post the launch, speculation is rife that Apple is considering incorporating NFC-enabled mobile payment system into its Passbook app.

Apple, it is believed, has been working on NFC integration for a while now. Prior to the October 2011 launch of iPhone 4S, rumors swirled that the new iPhone would imbibe the NFC technology and tech experts had been waiting for the launch with bated breath, only to find no NFC.

Despite divided opinions and detractors debating if Apple will incorporate NFC at all, the future environment for this technology looks favorable. A report by Pew Research Center asserts that "most people will fully adopt mobile payments by 2012, nearly eliminating the need for cash or cards". This report validates that the time is ripe for NFC-chips. Apart from eliminating the need for credit cards, the NFC technology would also enable iPhone users to share files easily from one iOS device to another in a jiffy. Apple could also use its existing iTunes account for administering iPhone-based mobile payments.

The iPhone's popularity, along with Apple's astute marketing ploys and gimmicks, could well be effective catalysts in popularizing NFC. With several pluses in Apple's ever-growing kitty, NFC-chips could be the harbingers of a global technological transformation.

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