We’ve talked a lot about mobile payment and the challenge of getting the players — or at least a slim majority of the players — to back a standard in order to gain some momentum.
Apple (AAPL) has been the holdout that refused to participate at all. With the release of the iPhone 5S and its fingerprint scanning Touch ID, it was hoped that Apple would finally choose sides, opening the doors for iPhone-toting consumers to add their considerable numbers and help mobile payment take off.
There’s just one problem though, and it’s a big one. Instead of adopting NFC communication like everyone else, Apple threw a wrench in the works by going with its own iBeacons. Once again, Apple is bucking the established trends and backing technology it feels is superior.
A quick primer on near-field communications. NFC lets mobile devices connect to nearby objects through NFC chips and tags. Smartphones running Google’s (GOOG) Android OS are increasingly NFC-enabled, and this technology lets a user “bump and pay” without having to pull out their phone.
NFC’s primary limitation is distance. The NFC chips or tag need to be less than one foot apart — ideally less than two inches. Not the end of the world when it comes to payment, but for products to have NFC communication (so they alert a passing customer of a special deal, for example), that requires a blanket of tags. At 10 cents a pop for NFC tags, it’s something retailers have been willing to live with.
Apple’s iBeacons uses Bluetooth Low Energy technology. Bluetooth is offered on most smartphones and the latest release of Android implements BLE support — it’s the same communication method used to connect Samsung’s (SSNLF) new Galaxy Gear smartwatch to a mobile device. BLE can also be used for secure transactions such a mobile payments.
Here’s where things get interesting, though. BLE has a maximum range of more than 160 feet along with a data throughput that’s double the speed of NFC. The potential is beginning to dawn on retailers. One industry insider quoted in a RetailWeek analysis of iBeacon’s impact on NFC says:
“iBeacons will be the biggest change for retailers since smartphones. Within the space of a month or so there will be 700 million iOS devices with iBeacons, enabling indoor positioning, micro-location and a new form of contactless payment.”
The Verge points out that mobile payment companies are already hopping in the iBeacons wagon with PayPal looking for a 2014 release of supporting products. Companies such as Estimote are offering iBeacons that cost in the $30 range, run for two years on a single coin battery (that’s the low-energy part of BLE) and can blanket a store with coverage on the cheap.