Enjoy a 15% discount on all purchases until the 31st of March 2023 using the promo code EOFWEB22 at check out!

Appliances and Electronics Our insights capture shifts in consumer lifestyles and themes impacting the global consumer appliances, electronics, and toys and games markets. Themes include new business models, sustainability, innovation and the future home.

New iPhone 5S Enables Biometric iTunes Purchases

Michelle Evans Profile Picture
Michelle Evans Bio

It was déjà vu in Cupertino, Calif., as Apple unveiled its next-generation of smartphones again with no NFC chip. Apple still remains the only major mobile phone device manufacturer to not incorporate NFC, which has long been considered the most likely technology to power mobile payments. There was, however, one new feature on Apple’s flagship smartphone that did garner attention from payment watchers — a built-in fingerprint scanner.

The new scanner, called the TouchID sensor, is integrated into the newly designed home button and can double as a security key instead of four-key password. The new laser-cut sapphire crystal home button will sit on top of a 170 micron-thin sensor and be surrounded by a stainless steel detection ring. TouchID is only available on iPhone 5S and not the iPhone 5C, which is the scaled-down version of the flagship phone intended for emerging markets. Apple says the fingerprint information will be stored on the phone’s new A7 processor and not on iCloud or the company’s servers. In addition, the scanner is not accessible by software. Early reviews of the new scanner indicate that the setup process takes less than a minute and accessing the phone via a fingerprint feels instantaneous and seamless.  An iPhone fingerprint reader has been expected since Apple purchased fingerprint reader and identification management software company AuthenTec in July 2012 for US$355 million.

Besides unlocking a user’s phone, this added functionality will enable users to purchase apps, music, books and other digital material Apple sells through iTunes all with the tap of a finger. Although not feasible today, there’s the potential for iOS software developers to one day incorporate the fingerprint scanner into mobile banking or payment apps for iOS users, assuming Apple opens it up to developers. The addition of a fingerprint scanner could help to bolster the digital identities of Apple’s user base and alleviate one of the biggest concerns that Apple and others have with mobile payments — security. Having a stronger position in mobile security would only stand to help Apple, if and when it entered the mobile payments battlefield. Even so, a full-fledge iWallet that would revolutionize the consumer payment experience is likely still years off.

That being said, Apple remains one of the best-positioned tech companies that could enter the payments space in the future thanks to several factors, including its existing technology like Passbook, which has the ability to store boarding passes, movie tickets, retail coupons and loyalty cards with updates in real time. The application also has geolocation capabilities, which enables the app to automatically pull up the proper card or pass when the consumer is in the relevant venue. Beyond that, Apple has a massive loyalty base and has been selling songs, movies and iPhone apps to its 435 million users for years and could easily transition that experience to other digital transactions. Although all the payment puzzle pieces have been lining up for Apple in recent years, it appears that the company well-known for disrupting industries is opting to ease into mobile payments by starting with biometric payments connected to only its iTunes universe.

While Apple’s decision to sit out of the larger mobile payments ecosystem may give competitors a head start at defining the future mobile payments landscape, it also gives Apple’s competitors the headaches that come with creating a new category. Given the slow adoption of mobile payments in Apple’s largest market of the US, Apple is likely not missing a major opportunity by not announcing a major payments initiative with this iteration of the iPhone. If anything, the wait-and-see approach has been central to Apple’s strategy with other industries it has entered and later dominated. Even Apple’s biggest naysayers would have to agree that it has been effective. When Apple revolutionized other industries from music to mobile phones to tablet computing, it wasn’t the first mover into the space. Instead it chose to observe and wait for others to work out the kinks in the market before entering the space with a more streamlined way of executing that business objective. It looks like that may be Apple’s plan when it comes to mobile payments, too. Apple’s payment vision will likely involve a more advanced version of its Passbook app, which will enable users to hold all accounts that currently reside in a leather wallet or alternate mobile app, and could even be funded by the consumer’s connected iTunes account. Apple also could even go a step further and entice consumers with a discount if they connected their iTunes’ account directly to their bank account and skipped the traditional payments rails altogether. Regardless, Apple’s time has not yet come to turn the still nascent mobile payments space on its side.

Interested in more insights? Subscribe to our content

Explore More

Shop Our Reports

World Market for Major Appliances

In 2022, major appliances volume sales declined by 2% compared to 2021. Yet, the industry continues to evolve and adapt to the current reality. Emerging…

View Report

Small Appliances in Asia Pacific

After falling for two years, Asia Pacific sales of small appliances recorded positive, albeit very modest, growth in 2022, with the dynamic Indian market…

View Report

Major Appliances in Asia Pacific

China’s struggles with the Omicron variant across much of the year meant that sales of major appliances declined in 2022, resulting in slightly negative growth…

View Report
Passport Our premier global market research database with detailed data and analysis on industries, companies, economies and consumers. Track existing and future opportunities to support critical decision-making across all functions within your organisation Learn More