How the iPhone could change the world of mobile payments


Apple may make your next iPhone your wallet, too. (EPA/KAY NIETFELD)

Apple has reportedly struck deals with Visa, American Express and Mastercard that enable customers to use their iPhones instead of credit cards to pay at the register. According to a Monday report from Bloomberg, Apple also has plans to put near-field communications chips in smartphones, the same kind of chip that lets you tap-to-pay with certain credit cards.

Apple did not immediately respond to a request for comment.

First, the cold water. Mobile payments have been something of a pipe dream for years. Nearly everyone sees the promise of letting people pay with their phones -- because cash, cards and checks are fussy to deal with every day -- but can't quite agree on how to do it. And to get something like mobile payments to take off, you have to get retailers, phonemakers, credit card companies, banks and, most of all, consumers on board. In the past, different industries have backed different systems, leaving a patchwork of mobile payment options--none of which really have taken off.

We've also heard the rumors about Apple's plans to put those payment chips in its phones before, especially when the company introduced fingerprint readers into iPhones --yet none of that speculation ever panned out.

But that doesn't mean we should throw out this new round of rumors, as well. The company has, after all, laid a lot of groundwork underlying the modern consumer experience. Its iTunes store already has millions of people's payment info. There are plenty of retailers happy to work with the firm to build apps and put sensors that communicate with iPhones in stores. And apps such as the Starbucks mobile payment app, which logs an estimated 5 million transactions per week, have shown that Americans are ready to use mobile payments as long as they're easy.

If Apple does fully jump into the fray with its own mobile payments system, it will face a lot of competition from other companies that have noticed that the cash register is more than ready for a high-tech makeover. Whoever cracks the code on mobile payments stands to make a lot of money. It's already attracted the attention of tech titans such as PayPal, Google and Amazon and a string of start-ups such as Square, Dwolla and Venmo  -- all of which promise to make mobile payments smarter, more secure and painless.

But none has Apple's advantage: access to a device that millions of people are already holding in their hands as they stand in line--and one they could potentially use to make payments without even having to open an app. If the reports of Apple's deals with major credit card firms are true, it could indicate that the firm's built the all-important consensus it needs across industries, which would give its version of mobile payments a serious boost.

Hayley Tsukayama covers consumer technology for The Washington Post.
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