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Although the NFC contactless technology underpins many mobile money projects, some key players believe its role is being overhyped. Apple may be of that opinion, according to one analyst, who believes the firm's upcoming iWallet will use Bluetooth instead of NFC.

The iPhone 4S and iPad HD already come with Bluetooth 4.0 technology, which would avoid the need to include NFC, argues retail analyst Pablo Saez Gil of ResearchFarm. He points to Apple's cautious attitude to NFC over the past two years, which have generally seen a storm of interest in the swipe payments mechanism. Google and several carriers have NFC-enabled handsets the basis of their mobile payments activities, but others like PayPal have held back, arguing that the need for merchants to adopt new terminals, and consumers to learn new habits, will slow uptake.

Apple has yet to adopt NFC in an iDevice, despite the appearance of products like Google Wallet, MasterCard Paypass Wallet and Visa PayWave all use the technology. By contrast, argues Gil, Apple has been an early and aggressive mover in supporting Bluetooth Low Energy (BLE) in its whole portfolio of devices. The latest iPad and iPhone models were the first major mobile gadgets to support BLE at the time they shipped and the technology could support cloud-based transactions, with Bluetooth handling the front end connection. This would do away with the need not just for NFC, but for cash registers and credit cards, reducing the hardware investment for retailers.

The standard "allows low consumption chips to act passively in the form of stickers in a similar fashion to NFC tags and devices can automatically and passively connect and transfer information seamlessly," said Gil. "The technology also enables long distance connections between devices of up to 50 meters. This feature will eventually enable payments on the go, without the need of fixed point of sale and traditional checkouts."

"Cloud-based payment solutions will produce the largest number of value benefits for retailers and consumers," said Gil. "While NFC still has the largest momentum behind it, it is clearly losing steam. Payments incumbents are embracing NFC because it simply represents an update of their delivery format rather than a threat to their business model. In contrast, cloud-based payments can gain mass adoption overnight, as they will arrive in the form of mobile apps, be they digital wallets or mobile retailer apps." Payments majors like eBay, as well as start-ups like Square, have been experimenting in this area, particularly targeting smaller merchants.

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