Payment by mobile phones using Near Field Communication (NFC) technology is quick, easy and convenient. It has also completely failed to catch on with consumers in the developed world.
If there's one company that can rescue the concept from oblivion, it is Apple, but will it kill off NFC in the process?
"The biggest challenge around mobile payments is consumer adoption, not technology," Mark Carter, VP for Mobile Products at global payment provider Skrill told IBTimes UK.
"Apple has 600 million [payment] cards linked to iTunes accounts, making it by a long way the biggest wallet in the world. [Add] lower energy Bluetooth and AirDrop [to that] and they could enable merchants to accept payments via Apple devices in stores."
While rivals Samsung, Google, Nokia and HTC all rushed to embrace NFC technology as a new way for users to make contactless payments, Apple has kept the industry wondering for the past two years, with at least one analyst predicting that Apple would turn to Bluetooth Low Energy instead of NFC.
NFC enables smartphones and point-of-sale (POS) payment terminals to communicate at short range by being tapped together, using NFC tags and other small transmitters to send and receive information.
Bluetooth Low Energy, on the other hand, works in a similar way to NFC, but enables long-distance connections between devices up to 50 metres apart, so you no longer need a fixed payment terminal or checkout to complete a transaction.
Carter is not sure why consumers would want to turn away from using contactless debit and credit cards and start tapping with their phones.
"It's ironic that NFC is called contactless, but it's not. There are some clunky solutions around sticking NFC stickers on the back of iPhones, which Barclays tried. NFC doesn't sit within the iPhone, but Apple [is creating] an ecosystem for what they call 'NFC payments' that links with Bluetooth," Carter explained.
"NFC is a dumb technology – if you have three payment options in your mobile wallet and there's a problem with one of them, it won't try the second option, it will just say it's declined."
Having seen how the wind is blowing, with Apple having filed a patent for a new iWallet system that uses Wi-Fi, Bluetooth and NFC to make mobile payments, and just last month rolling out its new iBeacon Bluetooth Low Energy sensors in 254 of its US stores, Carter says that Skrill is banking on Bluetooth over NFC.
Skrill has 35 million customers on its internet Wallet service, which is accepted by 150,000 merchants worldwide. Its new Skrill mobile wallet app has a combined total of 50,000 downloads on both iOS and Android.
"We're doing some work on Low Energy Bluetooth iBeacon technology because it's a smarter solution for consumers and merchants. One of the challenges with NFC is that it's a huge cost for merchants to implement the hardware [and] the iBeacon [hardware] is much cheaper than NFC, which would solve the consumer adoption problem," Carter said.
Carter sees NFC as too complex, since users need to tap a payment terminal, open an app and click some buttons to confirm before they can complete a transaction. Plus, there is no NFC chip in the iPhone.
What the iPhone does have is TouchID, a fingerprint sensor in the home button that unlocks the phone and verifies iTunes purchases, and Apple CEO Tim Cook is very excited about its potential for mobile payments.
"The mobile payments area in general is one we've been intrigued with. It was one of the thoughts behind Touch ID. We're seeing that people love being able to buy content, whether it's music or movies or books, from their iPhone, using Touch ID," Cook told analysts during an Apple earnings conference call on Monday.
"You can tell by looking at the demographics of our customers, and the amount of commerce that goes through iOS devices versus the competition, that it's a big opportunity on the platform."
Carter predicts that in the next 12 months, large retailers will start to deploy Low Energy Bluetooth solutions, which will drive adoption far faster than NFC.
"If you're looking for a company that can give a really smooth experience, Apple will likely get that right."