Pay-by-bonk? YEP, it's an Apple patent now...
(Insert preferred 'new iPhone will have NFC' rumour here)
Apple has filed a patent which defines how iPhones can make secure payments using a combination of NFC and a separate data connection – and it could lead to a new payments system for iTunes.
The patent describes a number of transaction models where NFC is used to make an initial connection between the phone and a merchant's point-of-sale terminal. It differs from current wireless payment models because the essential financial data is sent over a second, secure wireless connection with greater range than NFC, such as Wi-Fi or Bluetooth.
Having taken control of the payment away from the NFC ecosystem, the payment does become vulnerable to rogue apps. Apple protects against this by refusing to allow the app access to the payment chain.
A secure element already exists in current iPhones which is used to store the biometric data from the finger scanner, so adding the user's financial information is technically possible. It's more interesting politically, however, as most mobile operators want the secure element in the SIM card, rather than the handset, and using the Single Wire Protocol.
They are probably losing that battle, but with operators railing against Apple and Google as Over The Top players, the system isn't going to win any friends among Apple's biggest customers.
The patent application (available under the title “METHOD TO SEND PAYMENT DATA THROUGH VARIOUS AIR INTERFACES WITHOUT COMPROMISING USER DATA” via the US Patent Office) becomes far more interesting if you substitute the words "back end server" with "iTunes account", which is exactly what the mobile phone operators - who are looking for a share of transaction revenue - fear will happen.
It also states that pay-by-bonk is now an Apple-endorsed process:
The establishment of the NFC link, which occurs quickly, is referred to herein as an initial "bump" because the devices may touch each other momentarily when the NFC connection is being established.
The process would need significant buy-in from point-of-sale terminal manufacturers. While the NFC industry might trumpet this patent as a sign that the next iPhone will have NFC, that has been said of every iPhone which has appeared. When each one has lacked NFC functionality, the rumours become disgruntling murmurings of "never mind, next time".
As ever, the issues here are far more to do with business cases, ecosystems and - more than anything else - politics. ®