Will the Next iPhone Replace Your Wallet?

The next iPhones and iPads may include "near field communication" chips, which would allow users to make purchases just by waving the popular Apple devices.

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Do you take iPhone? The next iPhones and iPads may include chips that would allow users to make payments just by waving the devices.As we all know by now, there is no shortage of rumors about the next iPhone and the iPhone after that and the iPhone after that. And while each upgrade and potential release date are always tempting, a truly new feature can turn heads. Which is why rumors that Apple plans to include near field communication (NFC) technology into the next generations of iPhones and iPads -- which would allow people to pay with a quick wave of the devices -- is intriguing, for both consumers and retailers.

What Is NFC?

The "near field" part of NFC refers to the distance at which the payment works. For example, to make an NFC-equipped iPhone work, it must be swiped within 4 inches of a payment terminal. Many people are already familiar with this concept through certain gas station payment cards that let users tap their cards right at the pump, without a swipe and the subsequent transaction.

NFC has been a technology with a ton of hype that hasn't really made its way into the mainstream. That could all change if Apple adopts it into the mega-popular iPhone and iPad. The Android-running Nexus S smartphone has already indulged in NFC -- it doesn't currently support making payments, but it can read NFC data. Future updates should unleash the potential of the hardware, making this year an even more compelling time for Apple to try to get a jump on the NFC-enabled smartphone competition.

A Business Perspective

The recent reports suggest that Apple plans to go well beyond just dropping an NFC chip into its devices. The company could have its sights set on launching an entire mobile payment system. That's a tall order, but certainly not impossible.

How will the NFC iPhone concept affect small businesses? For starters, entrepreneurs could adopt it as a convenient way to make payments. Even small slivers of time savings are a good thing for busy business users. On the other hand, Apple could subsidize payment terminals for small businesses that would allow them to accept payments from iPhone and iPads. That could be a hot business accessory on par with having a standard POS system sitting on the counter. There is even the potential for lower fees than businesses currently pay out to the big credit card processing networks.

Promoting quick and widespread adoption of a new payment system -- and bringing as many small businesses on board as possible -- would be a big boost for Apple. This also opens up some marketing possibilities, in which you can use a customer's location to generate targeted ads. You won't hear many entrepreneurs complaining about being able to offer customers more payment options or more timely ads.

The Wallet Is Dead. Long Live the Wallet

There will always be questions about security when it comes to linking financial information with a piece of hardware that can be lost or stolen. NFC security will have to go hand-in-hand with payments capability. Users have gotten much more comfortable with options like online banking, so it makes sense that mobile payments will eventually be embraced as well. To see how popular it can get, just look over at Japan, where NFC is already a staple.

Smartphones are becoming all-purpose tools for just about anything customers want to do. Research a product? Go right on ahead. Check your bank account? Be my guest. Load up a mobile coupon? Absolutely. Pay at a store? Whoa, Nellie, you'll have to wait on that one. But you probably won't have to wait much longer. If Apple keeps up its usual upgrade schedule, the iPhone 5 will be announced in June.

Tags: Apple, Apple iPad, Apple iPhone, Business Trends, iPad, iPad NFC, iPhone, iPhone NFC, near field communication, next Apple iPad, next iPhone

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