Apple postpones NFC adoption for next-gen iPhone

Posted by Trent Nouveau

Apple will reportedly postpone its adoption of near-field communication technology (NFC) until the nascent standard reaches critical mass.

"NFC-based mobile payments require NFC-capable POS terminals. Only 51,000 retail locations support contactless payments (per Verifone's 10-K),"  Bernstein Research analyst Toni Sacconaghi wrote an investors note obtained by AllThingsD.

Apple postpones NFC adoption for next-gen iPhone

"Given that First Data alone deals with 4.1M merchant locations in the U.S. this suggests current penetration of just over 1 percent of merchant. Clearly, a higher critical mass is needed before mobile payments would take off."

According to Sacconaghi, Apple's next-gen iPhone, (which could either be the iPhone 4S or 5), will not feature an NFC-based payments platform.

"Instead, we expect Apple will evaluate and come to market with partners or a complete solution later, perhaps when NFC infrastructure is more established."

The analyst noted that Apple has traditionally followed a similar model with its mobile portfolio, as the company "made its name from re-inventing" MP3 players, laptops, smartphones and tablets.

"[And Apple will likely] retain the option to eventually do the same with mobile payments," said Sacconaghi, who emphasized that the NFC "opportunity" will eventually be worth billions to Cupertino after critical vendor and consumer mass is achieved.