Smartphones may soon replace these. (Photo : Wikimedia Commons)
The Apple iPhone 5 may do more than just take a bite out of your wallet - it may actually replace it. Evidence and rumors point to Apple including a near field communications (NFC) chip in the iPhone 5 that may allow it to function as an e-wallet.
A patent filed by Apple shows an iPhone-like device with the home screen showing an app called "E-Wallet." The name ewallet is currently a registered trademark of Illium Software, but in the event Apple is planning to make the iPhone 5 a payment tool, the name "iWallet" is still up for grabs.
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Many industry insiders have hinted that Apple is incredibly interested in NFC, as evidenced by the hiring of Benjamin Vigier, an expert in NFC to be its head of "mobile commerce."
NFC allows for two-way communication between devices. NFC is the next step after Radio-frequency identification (RFID, a wireless, one way non-contact interface that is used by some card swiping systems such as London's public transportation Oyster card. NFC forum director Debbie Arnold describes three main uses for NFC: "sharing," "pairing," and "transactions."
Sharing involves one device acting as a reader and the other the writer. The radio waves from the writer device are enough to power the reader's NFC chip to allow for data to be transferred between the two. This could be used with 'smart posters,' where an NFC chip embedded in a movie poster to transmit show times and dates to a nearby NFC-enabled device simply by being near it.
Pairing is the synchronization of the two devices to work together in tandem to complete a given task. Think game apps, or social media tools.
But it's the transaction ability that has everybody excited. By simply waving or shaking one's iPhone 5, one might be able to pay for items in store. Apple currently pays a transaction fee for purchases made through iTunes and other programs. By enabling the device to be a virtual card, and partnering with payment transaction companies like Master Card or Visa, it could eliminate those pesky fees and increase revenue.
The integration of and NFC chip into smartphones is becoming more and more critical to phone manufacturers as they seek to make their device the one-stop-shop for all of their user's needs. The recently released and popular Samsung Galaxy S3 comes equipped with NFC, and Google has pursued payment apps through its Android operating system for smartphones.