The Apple Beat: Why Passbook may be a better short-term option than NFC

By Gadjo Cardenas Sevilla

A number of pundits grumbled that Apple missed out on an opportunity by not including Near Field Communications (NFC) in the iPhone 5 as a mobile wallet solution. But Apple's Passbook App, coming on September 19th via the free iOS 6 update, is likely a better option at least for the short term.

The biggest issue facing NFC as a standard  right now is that it requires the NFC chip to be built in to a device and it also requires merchants to install NFC readers that connect to the various databases.

To date, only a handful of devices from RIM, HTC, Samsung, Sony, Nokia and a few others have shipped with NFC built-in. Owners of older smartphones can't simply upgrade their OS or buy an accessory to enable the service, they need to buy a new device.

I have had NFC for years on my Google Nexus, HTC Flyer, Galaxy Nexus and Nexus 7 devices and never used them except maybe to 'Beam' images from one device to another. Using the feature was awkward and seeing that it hasn't been adopted in Canada at all, tells me it will take some time for this promise of a mobile wallet to take off.

Passbook works when the developer or company create a pass using Apple’s Pass-Kit API and code. This is sent to users through email, URLs or an iPhone App. Users accept the pass  pass (ticket, coupon or card) on his their device, which takes him to the Passbook app and the pass is stored.

The merchant or store will need to be equipped with the bar code scanners which could be costly but at least the customers already have the tools they need for their end of the transaction, all they need is the smartphone and the app.

Apple's Passbook app isn't being touted as a mobile banking solution but it brings a viable payments solution to the market with systems and devices that already exist. Passbook will be part of the iOS 6 update coming to most iPhones, iPads and iPod Touches this September 19th. 

Passbook collects coupons, boarding passes, movie tickets, retail coupons, loyalty cards and others. Just like the popular Starbucks app, Passbook generates bar codes  that can be scanned by any bar code scanner already installed in most retailers, merchants, check-in desks, stadiums and banks. 

The merchant simply scans the coupon that shows up on the iPhone's screen and the transaction takes place it is as simple as that. I use a similar service every day with the Starbucks app and find it to be fast, efficient and the cashiers love it.

For as long as you have credit or value on the card that is stored in Passbook, transactions are as easy as showing off your screen and getting the bar code scanned. Passbook is also time and location enabled, this means that using Apple's geo-fencing technology, the necessary Passbook (i.e. Airline ticket) will appear just when you need it to check in at the airport.

The best thing about this system is that it uses the one component that all smartphones already have, their screen!

In Apple's case, the coupons are bright, colourful and attractive with the respective branding of the company.

It will work for sports events, concerts, hotels, airline tickets and discount cards initially but I am sure banks and financial institutions are looking carefully at this solution for general debit and credit situations.

Apple may or may not license Passbook but similar systems might work for other mobile devices, they already have the ability to show coupons on their screen, the rest is easy.

Owners of  the iPhone 3GS, iPhone 4, and iPhone 4S; the iPad 2 and third-generation iPad plus the fourth-generation iPod touch will get the iOS 6 upgrade for free, which means hundreds of millions of iOS devices can take advantage of the Passbook mobile wallet solution starting next week.