Why Rumors of Apple Adding RFID to the Next iPhone Is a Big Deal

iphone_rfid

The Touch project built a prototype RFID-equipped iPhone that used proximity to physical objects to trigger media playback: http://www.nearfield.org/2009/04/iphone-rfid-nfc

If rumors that Apple is adding an RFID reader to the iPhone are true, it’s huge!

An RFID reader would turn the iPhone into an e-wallet — allowing you to pay for everything, from a cup of coffee to a subway ride. It could also turn the iPhone into an ID card, a security access system and an electronic ticketing device.

It’s could also function as an easy and secure online shopping system that doesn’t require you to enter your credit card number.

Your iPhone could unlock your car, pick up e-coupons at the local mall, and pay for all your supermarket groceries just by laying it on top of the checkout.

Imagine if such a system was enabled on your iPhone. It would supplant your wallet — if enough retailers adopted the system, of course.

In Japan, such electronic payment systems are growing in popularity; the vast majority of Japanese cell phones have e-wallet capabilities. Sony, one of the leading companies behind e-wallets, is building its FeliCa system into all sorts of products, from the latest LCD TVs, to Vaio computers and the PlayStation.

Called ‘Osaifu‘ (wallet), the system has myriad uses, from an electronic keycard to a ticketing for Japan Airlines. MacDonalds  in Tokyo uses it as a payment and loyalty program.

“You launch the McDonalds app, search for a coupon and input your order, and place your phone on a device that will take order and then to another device to make the payment,” said Japanaese journalist Nobiyuki Hayashi, who uses the system regularly.

The McDonalds sytem is used by about half-a-million users, Hayashi says. Hayashi also uses his Osaifu mobile to pay for groceries at a store that has no cashiers whatsoever. After scanning his groceries, he places his phone on a special RFID reading pad, and his purchases are paid for.

Apple has filed several patents related to RFID, including using RFID to find and connect to WiFi networks, and a touchscreen RFID tag reader.

“Apple has built some prototypes of the next gen iPhone with an RFID reader built [in],” said the leader of the Near Field Communications Group on LinkedIn.

Apple, of course, would have to persuade a critcal mass of partners to support the system. At present, e-wallet systems have a chicken/egg problem, even though companies like Nokia have been pushing such systems for years.

Of course, Apple could use e-payments in its own stores, and probably wouldn’t have any trouble persuading companies like Disney and maybe Starbucks (which has partnered with Apple int he past) to join the program.

Apple could easily create a payment system linked to  iTunes.

In Japan, the e-wallet has become indispensable.

“I use cash everyday,” says Hayashi, “but I can live without it in Tokyo.”

About the author

Leander KahneyLeander Kahney is the editor and publisher of Cult of Mac. He is the NYT bestselling author of Jony Ive: The Genius Behind Apple's Greatest Products; Inside Steve’s Brain; Cult of Mac; and Cult of iPod. Leander has written for Wired, MacWeek, Scientific American, and The Guardian in London. Follow Leander on Twitter @lkahney and Facebook.

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