Does the Apple iPhone 7 support NFC Tags?

Apple just had their annual September big event, this time announcing the iPhone 7, iPhone 7 Plus and Apple Watch Series 2. So how are they? Depends on where you’re coming from. If you were already an Apple fan, these products are great and represent Apple’s continual iterative push for innovative, useful and beautiful products. If you were already not an Apple fan, then you saw this as the 3rd year of an overhyped, lackluster product announcement with products lagging behind other devices from Google and Samsung. Then there is the issue of removing the headphone jack…

But does the new iPhone have the NFCs!? (inside joke) The short story is yes, it supports NFC. Yes Apple is expanding what NFC can do but no, it does not yet support reading and writing NFC tags. If you haven’t read our original post on this topic, I suggest you read it first. Here we are six months later and all of our claims still hold true. Now lets take a look ahead. Based on evidence we’re seeing, we expect the following progression to occur.

The big development for NFC is that Apple announced support for FeliCa in Apple Pay. You’ve never heard of FeliCa? You have likely never been to Japan. FeliCa is the dominant mobile payment system in Japan where it is used in most people’s daily routine; transportation, stores, restaurants, web… Think of it as an expanded version of London’s Oyster card, but where you can pay for more things than just public transport. The USA lacks a true corollary; but we’re really just talking about a more efficient way to pay for goods and services. The technical implementation of FeliCa is totally different than “traditional” Apple Pay and EMV; FeliCa stores the value on the card itself vs in the cloud. “I don’t live in Japan, so why is this a big thing?” Because it’s a sign that Apple is expanding what NFC can do in the iPhone. Call me optimistic, but I am looking at it like this; there are only three sets of numbers; 0, 1 and many. Two years ago Apple did not support NFC at all (0), previously Apple supported NFC via Apple Pay (1) and now Apple is adding support for FeliCa (many). It’s not as a big of a leap for Apple to start adding additional uses for NFC within the iPhone; things like NFC tag reading and writing. As we said back in March, the more that consumers learn to trust that they can use their mobile device as a magic wand to interact with the world, the more you will see new deployments of this technology. Companies like Apple will add support to meet that demand.

So how is Apple Pay doing? Great, but a bit slower than they had hoped. Since our original post Apple has expanded Apple Pay throughout Europe, Hong Kong and beyond with a total of 9 major markets. Apple Pay is available at 11+ million locations worldwide and growth is doubling. This fall they are expanding to New Zealand, Russia and more. Apple Pay’s success and continued expansion is pretty amazing considering the number of geographic, cultural and political hurdles to overcome. Remember it’s hard to get people to change their daily behaviors and to trust new ways, especially when it comes to money. Importantly, there still has not been a single security issue with Apple Pay or the NFC hardware in the iPhone. This is all good.

When will Apple support NFC tags though? When they feel the time is right; and by right I mean when they feel that Apple pay has succeeded, consumer’s trust has been earned in contactless interactions and there is enough external pressure. You can’t rush Apple. A lesson learned this summer when a group of Australian banks tried to force Apple to open up access to the NFC controller so they could build their own competitive mobile payment system. Apple quickly shot this down with the argument that it would “diminish security” and that Apple is protecting consumers. This of course is not entirely true, but it takes too many words to understand why not so it’s a beautiful argument. In reality, Apple is using this to block competitors to Apple Pay because there are billions of dollars in profit to be made.

Hope is not lost for the iPhone reading and writing NFC tags though. Without getting too technical, there are multiple components that comprise the NFC system in the iPhone. Part of this is the NFC controller (radio) and part of this is the secure element (bank vault).  For a mobile payment systems to work it needs access to both the NFC controller and the secure element as it needs to securely store data for the financial transaction processing. Functionality such as NFC tag reading and writing does not need access to the secure element, but only access to the NFC controller. This difference is key. Apple will never open up access to the secure element as it would allow for competitors to build other mobile payment systems; Apple will always use the argument of “diminish security” to prevent this. However they can easily open up access to the NFC controller to allow for non-payment use cases. This is what we expect to see happen.

Does this even matter? Depends on how close to Cupertino you live. In the USA where the cult of Apple is stronger, the lack of NFC tag support in the iPhone is a bigger deal. Outside of the USA this isn’t as true. GoToTags has recently expanded to Europe and sees the NFC market as strong and growing. In areas like South America the iPhone is almost irrelevant, with Android dominating the market. GoToTags works everyday with companies worldwide to develop their product strategy for NFC, for both internal and consumer uses of NFC. NFC tags can be found everywhere and are going into everything; without most people even realizing it. NFC is being used for product information in retail, for anti-counterfeiting of products, physical security, assets tracking, gaming and out-of-home marketing; oh.. and mobile payment too. When NFC tags are combined with a management and analytics system such as the GoToTags Platform and other IoT tag technologies, it allows for even more functionality and value to be derived.

Someday Apple will have a big event and tell the world about the other uses for NFC. When that happens the Apple fans will see it as continual innovation at the “right time”, and the non Apple fans will see it as the iPhone finally catching up. Either way, it’s already happening now. The sooner you start planning for it, the more ready you will be for it. We can help.

What do you think? Tell us @gototags

-Craig Tadlock

Will Apple support NFC tags in iOS 10 for the iPhone 7?

It’s spring again and the Apple NFC rumor mill is heating up. In the fall of 2014 Apple added NFC hardware to the iPhone 6 and iPhone 6 Plus to support the Apple Pay mobile payment system. But that was the only thing the iPhone could do with NFC. Since Apple didn’t open up SDK access to the NFC controller for other developers, the NFC hardware inside the phone was severely limited to the types of applications it could be used for. Now its 2016 and Apple is expected to release new iPhone models along with an updated iOS. Will we will finally see support for additional NFC functions on Apple products?

If you’re savvy with NFC, you know NFC is used for far more than just payments; including marketing, security, asset tracking, events, gaming… the list is long. NFC is one of several tag technologies that allow things in the physical world to be connected with their online counterparts. Other tag technologies include printed barcodes and QR codes, Bluetooth based tags such as Apple’s iBeacon and BLE, UHF RFID and a handful of other lesser known technologies. NFC plays a unique role within this family of technology; it’s low cost compared to most other technologies, is uniquely identifiable, is difficult to be cloned and its very short range captures the consumer’s intention. NFC tags can be deployed on physical items for non-payment uses forming an “Internet of Things”. Mobile payments is just one, very lucrative usage of NFC.

So why hasn’t Apple opened up support for these other uses of NFC? Security and trust. Mobile payments are a big deal. They represent a fundamental change in the way that money flows through the system, from the consumer all the way through the banks and companies. Several large industries are built up to enable this and collect a toll as the money moves. By changing and controlling the existing transaction flow, Apple, and other mobile payment providers hope to route money through their systems and subsequently be the ones to collect the toll. Apple likely negotiated reduced rates from banks on the guarantees of increased security, lower fraud rates and high consumer usage.

There is a lot of on the line for Apple Pay to succeed. Apple knows that to change consumer behavior on this level they must gain and keep the consumer’s trust. A single public security breach would put the entire project in jeopardy. So like the fingerprint scanner before it, Apple is likely limiting access to the NFC controller for an initial period of time. The security industry calls this “reducing the surface area”. This allows the consumers time to become comfortable with NFC and mobile payments and allows Apple time to work out any security issues that come up. From Apple’s perspective the risk of a public security issue in Apple Pay outweighs the benefits of using NFC for other applications.

Apple Pay has been in the market for almost two years without a single public security issue being disclosed. Nice work! Now Apple might be looking towards the future for what else it can do with NFC. Rumors are popping up that Apple could open up the NFC controller to other developers to use.

Will they open it up to everyone, or just other payment companies? Or will they continue to keep NFC closed to increase the usage and momentum of Apple Pay over their competitors’ Android Pay, Samsung Wallet… We don’t know yet. What is clear is that NFC is happening in other verticals besides payments and Apple isn’t clueless about that; they just have other priorities on their mind for the moment. In the meantime we recommend that companies get started now with NFC trials so they understand how to leverage NFC in their business such that they are ready when it does open up. 

What do you think? Tell us @gototags

UPDATE  – Make sure to read the followup post about the iPhone 7

-Craig Tadlock

NFC & EMV: Payment or Painment?

Over the last couple of months I have been using the new Android Pay as well as started to experience increasingly frequent use of credit card EMV payment process during retail purchases. This experience has brought up a thought…….Will the smartcard EMV adoption in the US actually help accelerate phone-based NFC payment use?

Let me explain. I have been using Google Wallet NFC pay for couple years now, at least in the locations supporting this technology. Not the smoothest and most reliable experience, but for a techie it is (when it works!) certainly more convenient, faster and more secure than using mag-stripe card payment. Now that Android Pay replaced Google Wallet, the experience seems to be smoother (when it works!), although in the heterogeneous Android environment you just never know what type of experience your combination of hardware and OS may surprise you with. In any case, Android Pay seems to be an honest effort by Google to get closer to Apple Pay, which is the benchmark for NFC phone payments.

Over the last 6 months  nearly all my payment cards have gotten replaced with the chipped EMV versions. Over the last couple of weeks I have also started to use them in the actual smartcard readers which are now available and enabled at major retailers. I am going to ignore the confusion this transition is causing about when and where you as a customer use the smartcard payment process versus our Pavlovian habit of mag(or mad) stripe swiping. This will wear off as we get used to the new process (eventually….). So I am going to focus on just my personal experience with the EMV card payment process.

After hours of wondering isles and chambers of a retail dungeon, and picking something you want to take home, you finally make it to the checkout, get your $total$, and it is time to pay. You correctly identify this payment will take place in the new mysterious slot, usually on the bottom of the payment terminal and insert your card. Message flashes up with some instructions on the payment terminal. Instinctually, flashing or change on the screen could mean to someone (like me) that what needed to happen, happened, and it is time to yank the card and get out of dodge. Sorry, transaction cancelled. On to Round 2 – repeat inserting but this time you actually have to concentrate on this Minecraft resolution display and read what it actually says, like “while the bla blab la blah blah blah bla, do not take your card out…”. Ahhhhhh, I see what happened. So we stand and wait….. All of a sudden signature window shows up, time to yank the card, sign, and get out of dodge. Sorry, transaction cancelled. Damn it! On to Round 3 – fast forward to signature, but DO NOT touch the card. Sign aaaaaand wait. Wait, wait a little more. And finally again whole bunch of instructions in a Minecraft font telling you that “Bla Bla Bla Blah done Blab la Blah blah  remove your card!” By now what you bought is out of warranty and someone else moved into what used to be your home. I feel secure about my payment, but am ready for assisted living.

Even if you get this routine all correct the first time around, it feels like you are waiting for a home mortgage approval. Today’s consumers, especially in America (me in the top 10) are after convenience (or lazy…). NFC contactless phone payment, when it works, is like the difference between power windows and manual wind down windows.

So maybe EMV finally arriving in North America will be the best thing that ever happened to NFC payment. Someone just needs to teach all the Android smartphone users what it is… Apple has been doing a decent job.

What do you think? Tell us @gototags

-Jan Svoboda