Apple is reportedly working with Dutch chipmaker NXP to add secure, short-range wireless technology into future iPhones. This means the tech darling, known for shaking up entire sectors, is gearing up to change how you pay for everything from pizza to shoes.
The technology has been used before, by none other than Google (GOOG) and Microsoft (MSFT) .
But the mobile touch-to-pay market has struggled to take off, partly due to the fact that most retailers today still aren't equipped with near-field communication (NFC) capabilities. There's also still just a small portion of society that even owns touch-to-pay-enabled phones, or knows when to use them.
In typical Apple (AAPL) fashion, the Cupertino company may be entering the market at just the right time, with enough artillery to make some waves.
The company has been allowing developers to build mobile payment technologies into their apps for years, and Starbucks (SBUX) has been offering touch-to-pay through its loyalty app since 2011, helping to familiarize Apple's loyal fleet with the idea of a digital wallet.
That's not to mention that Apple has a trove of credit card data, more than 800 million credit cards on record through iTunes alone, which can be easily incorporated into a digital wallet app.
"It makes sense Apple would try to position the iPhone as the perfect payment device," said Roger Enderle , tech analyst at the Enderle Group . " Starbucks customers have been doing this for some time."
It's unclear whether NXP's technology, which the Financial Times reported Friday would be incorporated into Apple's "next" iPhone, would come as early as the iPhone 6 on Sept. 9 . NXP didn't want to comment on the rumors, and Apple didn't return emails requesting comment.
But what's important here -- whether it comes in two weeks or not -- is that Apple's interest in touch-to-pay likely signals a transformation in the market for mobile payments, a sign that people are finally willing to trust their smartphones as virtual wallets.
"Folks that are shopping online would like to have something they can push-to-pay," Enderle said.
Consumers have been slow to get rid of their wallets, but mobile payment technologies are evolving every day, and customers seem more willing then ever to make direct mobile payments, evidenced in part by skyrocketing mobile retail sales.
PayPal ( EBAY ) surpassed 150 million active registered accounts last quarter and expanded merchant services payment volumes for the fifth straight quarter. Mobile sharing site Venmo, now owned by PayPal, recorded a 62% jump in payments volume quarter-over-quarter earlier this year. It now handles more than $1 billion in consumer mobile payments annually.
" Apple is not going to go into an established market it doesn't really think it can nail," said Roger Kay , founder of tech market intelligence company Endpoint Technologies. "The idea, then, is not to get into mobile payments until mobile payments are ready."
By ready, he means from a technology and security perspective, ready to be adopted by the market, and capable of being produced easily and cheaply.
Of course, security is still a potential barrier. With Russian hackers reportedly infiltrating J.P. Morgan's (JPM) secure system this week, and Target (TGT) still reeling from its massive breach in December, some consumers are naturally wary of mobile pay technologies.
Apple will likely build security into whatever mobile wallet it introduces. It already offers alternative security for phones, such as using a finger swipe. Google offers similar security measures. If phones do one day replace the wallet, encryption and multi-layered security will be required.
It's important to note that, because Apple is so careful when it enters new markets, there's a good chance it is still in the research and development stage with NFC.
These reports are "not necessarily indicative of an imminent product," Kay said.
" Apple can take more risks than other companies,because it's in a stronger financial position," he said. "But when it takes off, Apple has to be ready."
Apple shares hit fresh 52-week highs on Friday. Its shares were trading up 0.2% to $102.45 recently.
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