As the expected launch date on September of the next iPhone draws near, rumors about NFC on the new iPhone have begun to appear again. Yet, whether Apple adopts NFC on iPhone won’t change much. Here’s the reason why.
For NFC, the largest and the most compelling use case is transit (70% of the mobile payments industry agrees on that). However, just a very small fraction of transit ticketing deployments is based on contactless EMV. The bulk of transit worldwide is based on proprietary standards and protocols, e.g. ITSO in the UK, Calypso in France and some other countries, etc. All those standards and protocols have zero interoperability.
But that’s not all. Within the UK alone, every transit operator and every local authority that implemented ITSO-based smart ticketing uses proprietary security keys.
Hence, for NFC-enabled iPhone to be used for transit in the UK, the following needs to happen:
ITSO must certify iPhone’s secure element to insure full compliance with applicable standards. Will Apple be even applying for such certifications in every country where smart ticketing is implemented in transit? You can guess the answer. Even if ITSO unilaterally declares NFC iPhone to be ITSO-compliant, the issue of security keys remains.
Will Apple knock on the door of every transit operator round the world to offer them free access to iPhone’s secure element? Of course not.
In spite of transit, there are almost 20,000 financial institutions in the U.S. who issue payment cards. Can they realistically make a deal with Apple, Samsung, etc.?
Where does all that bring us to? Two key conclusions:
Cards are here to stay. You cannot stick a mobile phone into millions of ATMs and ubiquitous card terminals which are present everywhere you want to pay. Add the explosive mPOS revolution to the equation and sprinkle with the fact that 90% of those mPOS devices do not have contactless interface.
Mobile transit ticketing needs a focused and dedicated effort by a company determined to make it work. The one which can talk to every operator out there. The one which is willing to bend backwards to stitch together all those isolated standards, protocols and hundreds of security keys, and integrate them all via a single form factor. That won’t be Apple or Samsung. And that form factor won’t be a mobile phone.