Can The iPhone Make Even Contactless Look Good? The Curse Vs. The Cool

Which is stronger: the curse of contactless payment or the coolness of the iPhone? Last week, Visa said it planned to launch an add-on to Apple’s iPhone that will turn it into a contactless payment device for Visa’s payWave system. Or maybe not.

The fact that Visa, along with a three-year-old Texas startup called DeviceFidelity, issued a news release and almost immediately tried to retract it is telling. Then again, the fact that Visa thinks it's possible today—in the age of Google cache and umpteen sites that seem to like publishing verbatim news releases—to take back a release after it's published is itself a very revealing statement.

No one involved will admit why. Visa wouldn’t acknowledge the existence of the May 4 announcement at all. A DeviceFidelity spokesman would only say: "There was a press release and now there's not."

In many ways, this tale is so very much the life story of contactless. After years of promotion, customers don’t see any advantage to contactless retail payment--it’s no faster than swiping a card’s magnetic stripe. Many don’t even know they have contactless credit cards.

Retailers such as Subway and Home Depot are unenthusiastic about contactless even when equipment vendors all but pay them to install the necessary hardware and software. Early-adopter Best Buy has dumped support for Visa’s payWave because of high fees and low transaction volumes.

Contactless could really use something to make it cool—and something everyone wants.

Enter the iPhone. Apple’s products are cool. They’re elegant. They’re effortless. And when Apple makes an announcement, it’s orchestrated down to the smallest detail, complete with a tantalizing live demonstration and an audience packed with throngs of cheering Apple-lovers ready to hold their breaths until their new toy arrives—and, of course, Steve Jobs.

That’s the kind of cool the iPhone has. It’s a cool that contactless vendors would love to rub up against—and one that Visa would really love to have with payWave.

So what is Visa’s payWave offering for the sleek, elegant, effortless iPhone? To all appearances, it’s a clip-on case that attaches to the back of the iPhone 3G and 3GS. The case connects to the iPhone’s electronics through the dock connector and allows the iPhone to use a microSD flash memory card that can be installed in the case. Does it use alligator clips? Not quite, but it's frighteningly close.

And why a microSD card? Because that’s the form factor Visa and DeviceFidelity have been working on for a payWave plug-in card. In February, the two companies announced In2pay, a device the shape of a microSD card that works on any smartphone with an appropriate slot. DeviceFidelity says it has successfully tested In2pay with 150 models of phones that have an external microSD slot to plug it into.

In2pay will plug into the iPhone, too, if you don’t mind using an add-on case to provide the microSD slot that the iPhone doesn’t have. And what iPhone lover would resist that? Right: all of them.Yes, it’s true. Visa’s iPhone case is a kludgy retrofit. And it’s not even a kludgy retrofit for contactless. It’s a kludgy retrofit for a generic microSD slot. It’s everything the iPhone is not. And it's the opposite of what iPhone users love about their phones.

They love the fact that everything about the iPhone feels unique (even if it’s not). They love the fact that an iPhone doesn’t run anyone else’s apps or match anyone else’s hardware designs. They love that everything is custom-made to meet Apple’s standards. And they especially love the sleek fit and finish--the futuristic, jet-black perfectly rounded corners of the Flash-less phone.

And what does Visa offer for iPhone contactless payments? A plug-in device that works with 150 other smartphones; a snap-on case to make the iPhone work like those 150 other phones; and software that will work exactly the same way on the iPhone as it does on every other phone. Not to mention a less-than-attractive mandatory case, for slots that appear to be ad-libbed by a very bad improv troupe.

No matter how well it works, the device simply doesn’t have the polished, custom, just-for-you-lucky-iPhone-users glow that these people crave. It’s generic--the opposite of the iPhone’s appeal.

So maybe it’s no surprise that Visa’s contactless-for-iPhone announcement would be the opposite of an Apple announcement, too. No careful orchestration, no sharp live demo, no ready-to-buy throngs. (In fact, because the In2pay microSD device is being tested through the end of 2010, there won’t even be anything for anyone to not buy for many months.)

And—according to the vanishing news release that can still be found squirreled away in corners of the Internet—there's not a supportive sound bite from Steve Jobs or anyone else at Apple.

But here’s the truly astonishing part of this tale. Despite the kludgy retrofit, despite the bungled non-announcement, dozens of Apple-oriented Web sites still talked up the iPhone payWave case as if it could be the best thing to happen since the iPhone itself.

That’s how much cool the iPhone has to spare. And it's also how much opportunity has been lost with Visa’s fumbled iPhone contactless announcement. The perennially hapless retail technology that nobody seems to love still looks good in the glow of the iPhone--even without making contact.