Make payments directly from your iPhone/iPad

The next iPhone/iPad 2 will reportedly feature a mobile payment service using iTunes

What’s the point in even buying an Apple product when you know that next year an even cooler version is going to be released?  Apple is evidently planning to integrate the next iPhone and iPad iterations with Near-Field Communication functionality, which will allow for—among many cool things—mobile payments directly from the device.

What this means—stay in your seats—is that a person can walk into a store, restaurant, whathaveyou, and pay for goods and services with their iPhone or iPad, as they would any credit or debit card, but without needing to attach any dongle or swipe case (think Square or Intuit).  The technology would tap into the user’s iTunes account to retrieve bank account information, according to Richard Doherty, director of consulting firm Envisioneering Group.  Bloomberg broke the news late Monday night.

Doherty told Bloomberg that he has direct information from Apple engineers that the iPhone 5 for AT&T as well as the iPad 2 will feature NFC technology, a short-range high-frequency wireless communication feature that can send and receive data from a distance of 10 centimeters.

The technology also has other cool uses, like using proximity sensors to guide users through more specific locations, like stores and malls—just as they would use their maps app to get around San Francisco or New York.  Sumeet Jain of CMEA Capital sees NFC technology being deployed more widely among small businesses this year, allowing customers to locate an item on the exact shelf in the exact aisle of the store.

“Google is being pretty aggressive about deploying this kind of technology,” said Jain, who told me in December that he believes Android will lead the fray in mobile-based commerce.

Currently, Apple pays credit card processing fees on every iTunes purchase that customers make, but by encouraging customers to pay directly from their bank accounts, Apple could end up cutting its own costs significantly.

Apple’s mobile payment service could debut as early as mid-2011 and will not only hold bank and credit card information, but rewards and loyalty points as well, so that a customer can walk into a local brick-and-mortar retail store and complete an entire transaction—complete with discounts and rewards points tracking—all from his or her iPhone.

Currently, customers can make payments through PayPal using their iPhones, which major brands and chains are starting to catch onto.  Starbucks became the latest chain to jump onto the mobile payments bandwagon.  The company announced last week that Starbucks customers can now use their iPhone or Android device to pay for their morning latte by having a barcode on their phones scanned, which deducts money directly from their Starbucks account (which can be reloaded using a credit card or PayPal account).

Other companies have been probing the mobile payments platform as well.  Square recently debuted its payment service which uses a little square dongle that plugs into your device to swipe credit cards, but that’s for users who are accepting payments—not the other way around. 

Apple’s new mobile payment service could do away with dongles and plastic cards entirely.  Up next for the iPhone 6: an app that allows you to renew your driver’s license from your phone.