Apple is taking a gradual approach to mobile payments that is less ambitious than rivals such as Google and Microsoft. Last month Apple debuted the Passbook service, which bundles together loyalty cards, tickets, and coupons, but does not connect directly to debit or credit cards, making it nonviable as a wallet replacement.
This strategy is typical of Apple, a company that often chooses to wait while competitors iron out market kinks. Although the idea of Apple facilitating payments to merchants directly through a wallet app was floated, the concept was defeated by the complexity involved.
Apple’s iPhone hardware division had been exploring over-the-air payment technologies that included NFC, but company employees had reservations about NFC’s security and whether they could cram in a chip and antenna without severely compromising the iPhone’s battery life. Slow retailer adoption of NFC also was a concern among Apple executives.
The company’s Phil Schiller was worried that Apple might be blamed by consumers for a bad experience with a retailer. Industry observers expect Apple to become more aggressive in the mobile payments space once consumers are more accepting of substituting their phones for their wallets, and it already has an advantage in the critical mass it has built in terms of iPhones sold and credit card accounts registered with its iTunes store.