Apple Has Killed NFC Payments. Can Anyone Bring Them Back?

NFC payments are dead. That, at least, is the conclusion of venture capitalist Matt Witheiler of Flybridge Capital Partners, and he thinks he knows who killed them and with what weapon: Apple (NASDAQ:AAPL), with apathy.

"NFC pundits for years have claimed that an Apple entry into the market would herald the era of NFC," Witheiler wrote for on Friday (June 21). "The belief was that Apple was the only phone vendor with enough market share and influence on retailers to actually pull NFC off. And with 435 million iTunes accounts worldwide, each with a funding mechanism of some sort, there was some truth in this."

But after years of NFC patent filings and rumors, Apple is still waiting for the right time to add NFC to the iPhone. And with the announcement of iOS 7 and no sign of NFC support, Witheiler has given up on Apple being the savior of NFC payments—and on NFC payments themselves. "With Apple out of the NFC game, there is no vendor to shepherd in the dawn of NFC," he wrote. "And without a shepherd, I fear NFC is destined to find a home in the payments graveyard."

That's a reasonable conclusion based on the facts on the ground. But is any of that Apple's fault? Expecting Apple to sweep in and rescue Google Wallet, Isis and any other mobile payments player who bet on NFC is, well, a little idealistic for a VC. Apple isn't in the business of rescuing Google (NASDAQ:GOOG), mobile carriers, Visa (NYSE:V), MasterCard (NYSE:MA) or anyone else who hasn't been able to wean customers and retailers off their addiction to mag-stripe cards. Those are Apple's opponents in one arena or another, and kindness to opponents has never been an Apple hallmark.

That said, are NFC payments really dead? Not exactly, but only because they've never really been alive—and they won't be until some NFC champion convinces retailers that NFC is a cheap and effective way to link loyalty programs, mobile coupons and in-store offers by way of customers' phones. And that deep-pocketed champion will have to give the technology away and not demand, Google-style, to sift through every transaction for priceless retailer CRM data.

How likely is such a champion to show up? Only one candidate comes to mind, and it's not Apple—which in this case is an advantage. IBM (NYSE:IBM) isn't in the smartphone business, doesn't make its living on CRM data and isn't even in the point-of-sale business anymore, having sold its POS division to Toshiba—but enough big retailers trust their systems to Big Blue that IBM might be able to lead them to use NFC for loyalty. Once they're hooked, IBM might even be able to nudge them in the direction of NFC payments.

Of course, that's really just substituting one Great NFC Hope for another. But it could be the only hope NFC's got.

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