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No mobile wallet for iPhone 5 owners

By Claes Bell · Bankrate.com
Monday, September 24, 2012
Posted: 5 pm ET

Not to rain on your parade, but if you're "unboxing" a brand-spankin' new iPhone 5, here's something it won't have: built-in mobile payments.

While you probably won't miss it as much as Google Maps, many of the latest smartphones are now equipped with what's known as a near-field communication, or NFC, chip. That chip is designed to allow secure payments through those contactless point-of-sale terminals like Visa payWave or MasterCard PayPass.

It may have a lot of new features, but the iPhone 5 doesn't have a mobile wallet

It may have a lot of new features, but the iPhone 5 doesn't have a mobile wallet. (Photo by William Hook)

And despite some speculation by AppleInsider and others, the iPhone 5 doesn't have one. Nor will its built-in shopping app, Passbook, be able to make payments directly. Instead, it offers a variety of different ways to interact with the businesses you use, such as coupons and loyalty program rewards based on your proximity to a particular store, easy digital ticketing and other perks.

So why didn't Apple integrate mobile payments into its iPhones in the same way Google has integrated Google Wallet into some Android phones?

One reason may be that people just aren't ready yet to trust technology companies, including Apple, with the keys to their checking account or credit card account, says Mary Monahan, executive vice president and research director at Javelin Strategy & Research, based in Pleasanton, Calif.

Javelin researchers asked consumers which company they would prefer to provide mobile wallet services. Visa, PayPal and Verizon topped out the list; Apple was in the middle of the pack in 10th place.

The other part comes down to Apple's bottom line.

At this point, mobile payments users and contactless point-of-sale terminals at retailers may not be widespread enough to make the technology worthwhile, Monahan says.

"I was hoping they'd bring out payments, but I do understand why they're not," she says. "They've got to put it in every phone, and it's money right out of their pocket right now, in terms of profit. When you can't use it in very many places … I can see how that affected their decision."

Until merchants get more contactless payment terminals, smartphone makers like Apple are unlikely to put NFC chips into their phones on a universal basis, and retailers won't purchase the expensive terminals without a guarantee it will increase their appeal to customers.

"It is a chicken-and-egg situation," Monahan says.

The "egg" might get a little boost in the coming years, as the EMV standard, which allows for contactless payments, becomes standard for payment networks like MasterCard and Visa.

And don't count Apple out of the mobile wallet business for good, she says. The company may just be fine-tuning all the perks to lure customers away from plastic credit cards.

"In the U.S., we've got this great way to pay already. We can use cards. It works very well," Monahan says. "What most people are focusing on is just the payments, and that's not going to do it for most consumers. They're going to have to change the payment experience."

But if Apple can integrate loyalty cards, coupons, ticketing, ordering and everything else into one app, that may be enough to get consumers to jump on the mobile payments bandwagon.

What do you think? Would you want to have all those functions integrated into one app? Would you want to pay with a smartphone at all?

Follow me on Twitter: @ClaesBell

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