Meet Your New Debit Card: The iPhone

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Upping the ante on streamlined payments, Apple is poised to convert iPhones and iPads into literal money machines. According to BusinessWeek, the company is planning on adding Near Field Communication tech to AT&T's iPhone5 and the next generation of iPads. At first glance, the change boils down to iFans being able to pay for goods by swiping handhelds in front of a scanner, instead of fumbling for credit cards or cash. Although this sounds simple, analysts say the impact could go far beyond customers swapping silicon for plastic:

  • This Is a Seismic Shift  According to TechCrunch's MG Siegler, adding NFC to the i-line change "could transform Apple from the biggest technology company in the world, to the biggest company in the world, period," by adding PayPal's domain to its extensive reach. BusinessWeek's Olga Kharif adds that this would give Apple "a piece of the $6.2 trillion Americans spend each year on goods and services."
  • NFC Tech Could Tip the Android Wars  Although Google's attempted to play in the PayPal space with tech like Google Checkout, it's been a muddled effort says TechCrunch's Siegler. Consumers and retailers have been kind of iffy on Google's tech, Siegler says, whereas Apple's back-end support for NFC has a built-in fanbase: the "millions and millions of people around the world" who use the iTunes infrastructure, which would support Apple's NFC system.

  • Advertisers Would Benefit  Adding swipe technology to handhelds is as good as giving advertisers a peek into customer's closets. Olga Kharif quotes Richard Doherty, director of consulting firm Envisioneering Group as saying "NFC would let Apple's iAd advertising network personalize ads to the places where a customer is spending money. That could double or triple the ad rates that Apple charges."
  • Mom and Pops Would Get Behind This  Retailers have been howling over the staggering fees they pay for the privilege of letting customers pay by credit card. Businessweek Kharif also points out that although the Durbin Amendment will ease some of the pain starting this summer, it also allows retailers to trash-talk or talk-up one form of payment over another. If Apple steps in with a retailer-friendly rate (or none at all), indies and corporate businesses could sign on in droves, upping Apple's muscle. An added bonus: Kharif says Apple isn't playing around, and may have plans to give merchants free terminals "to encourage fast, nationwide adoption of NFC technology and rev up sales of NFC-enabled iPhones and iPads."
  • Death Knell for Credit Card Companies?  As long as there are wallets, something has to fill those credit card slots, but, because Apple's system would let customers dip directly into their checking accounts instead of bothering with a middleman like Visa or MasterCard, the credit card companies could lose out on money from vendors as well as customer payments. Business Insider's Pascal-Emmanuel Gobry says rewards programs may not be enough to keep customers, because Apple could offer "merchants to take over their loyalty programs."

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