September 26, 2013

U.S. payments players keep wondering when Apple will make a move in mobile payments as it releases new versions of the iPhone without any NFC capability. Many think that if Apple does make a move to enable payments on its mobile devices that it will push the market towards faster adoption as the legions of Apple fans take up the ability to pay with their phones.

Here in Canada those involved in mobile payments are also scratching their heads over Apple’s plans. But for a very different reason. NFC seems to be moving ahead full speed in Canada, with high NFC penetration (in comparison to the U.S.) among point of sale terminals (31%) and mobile handsets (15%). And that NFC penetration is increasing rapidly, particularly among mobile devices as almost all new phones being issued by the major carriers here are NFC enabled, except for the iPhone.

[See Related: Geography, Collaboration and Innovation in Canada’s Mobile Payments Market]

Blackberry (yes, it is still popular here in Canada) and Samsung have worked with some of the mobile payments players here in Canada such as CIBC and built NFC into their newest devices, Apple lags behind. And it could be a serious drag for the mobile payments market here going forward; the iPhone makes up 35% of the smartphone market.

Some are looking for a solution to this issue: CIBC says that it is working with partners on developing a sleeve that is NFC-enabled that would fit around the iPhone. SecureKey, an online and mobile security company, is developing a QR code point of sale solution that would allow iPhone users to make mobile payments. But a QR code solution doesn’t have the same convenience as a tap-and-go NFC payment, which would give iPhone users a lesser customer experience.

But nobody seems to know how Apple plans to approach the issue. It’s conceivable that if Apple stands pat it could lose market share in Canada to Android, as all new Samsung models being sold here are NFC equipped. Faced with that prospect, would Apple finally consider moving into NFC with the iPhone to keep its market share in Canada? And what kind of boost, if any, could that give to mobile payments here in the U.S. if Apple starts selling NFC-enabled iPhones across the border? It would seem that at some point Apple is going to have to play along with the NFC market here, but until then there will be much more head scratching.

[To learn more about new opportunities in mobility in financial services, check out the agenda for the New Opportunities for Mobility: A Financial CIO/CTO Roundtablesession at the upcoming Interop event in NYC.]

Jonathan Camhi is a graduate of the City University of New York's Graduate School of Journalism, where he focused on international reporting and interned at the Hindustan Times in Delhi, ...