Here's What's Missing From The iPhone 5 That Will Help Square Dominate Mobile Payments


A lot of people are buzzing over Apple’s decision to not install a Near-Field Communications (NFC) chip in the iPhone 5. NFC technology would have allowed the iPhone 5 to process mobile payments.

Apple Senior VP Phil Schiller told AllthingsD that it’s not clear that NFC is the solution to any current problem, and that “Passbook does the kinds of things customers need today.” 

In a recent report, BI Intelligence explains why Apple was and is uniquely positioned to make NFC work as a mobile payments solution, and how without them, card readers like Square are in the best position to dominate the mobile payments space. We also detail why Square specifically has the edge over larger latecomers in the card reader space.

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Here’s why card readers — and specifically Square — are now positioned to be the future of mobile payments:

  • Apple was uniquely able to make NFC work: Convenience and distribution are the two strategic issues that need to be solved for a mobile payments solution to win. Apple is the one company that could address these two issues with NFC, and solve it’s chicken-and-egg problem. 
  • Without them, card readers like Square represent the best solution: They are at least as convenient as the incumbent solutions, and sometimes more so. Paying with your name, as with “Pay with Square”, when it works, is even more convenient than cash or credit.
  • Square has cracked the distribution nut: First, by piggybacking on the existing credit card network, and now by moving up the value chain and providing added services to merchants, ensuring that sellers will use the platform more and more.
  • And is experiencing rapid growth: Square is growing at an incredible pace. Square recently reported it’s now on track to process more than $6 billion worth of transactions per year. That number could instantly double thanks to its new deal with Starbucks. All that despite being only three years old, with customers previously limited to small businesses and sole proprietors based in the United States. For comparison, Verifone is a global 30-year-old company which serves huge retailers as well as smaller businesses, and is on track to process about $10 billion in mobile payments this year.

In full, the special report:

  • Outlines the two overriding strategic issues in the market.
  • analyses the four kind of solutions that currently matter — card readers, apps, carrier billing, and near-field communications — and their prospects for success.
  • Show why it’s too early to size the market (but why it will be big).
  • Map out the winners and losers.

For full access to the report sign up for a free trial subscription today.

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