Next iPhone and iPad could feature NFC contactless payment

Posted by Emma Woollacott

Apple is said to be planning to incorporate Near Field Communications (NFC) into the iPhone 5 and the iPad 2, allowing the devices to be used to make instant payments in stores.

Richard Doherty, director of consulting firm Envisioneering Group, told Bloomberg that the feature could appear as early as the middle of this year when the new products are released.

NFC allows information to be transmitted over short distances - typically up to four inches. It's already used in many countries to make micropayments with the money being taken directly from the user's bank account in a similar way to PayPal.

Such a device could boost Apple's profits by allowing customers to use the iTunes store without Apple having to pay credit card processing fees. There's tremendous scope for loyalty schemes and the like.

And the system could also allow Apple's iAd advertising network to target ads based on where customers are actually spending their money.

Doherty said that Apple has developed a prototype payment terminal for retailers and is considering subsidizing it or even giving it away free.

NFC is not exactly a new idea - it's already been incorporated into Google's Nexus S phone, for example, and there's an NFC scheme in the pipeline from AT&T, T-Mobile and Verizon. But the sheer force of numbers of Apple users could help persuade retailers to adopt the technology.