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NFC: The next trillion dollar industry (AAPL)

Just when you started to think that Apple Inc. (NASDAQ:AAPL) couldn’t possibly come up with another multi-billion dollar money-making venture, rumors have started trickling in that the iPhone 5 and iPad 2 will contain near field communication systems.

This “wave and pay” technology, dubbed NFC for near field communication, will allow you to swipe your phone like a credit card at Macy’s or the local gas station. And it will all rely on a small chip that can exchange data with a checkout terminal when the terminal’s within four inches of your phone. If Apple adopts the technology, it should have an inherent advantage over competitors thanks to the fact that most iPhone and iPad users have already linked their devices with a credit card or bank account via iTunes.

The biggest hurdle to adoption? Ensuring that retailers support NFC. According to Reuters, Apple is considering deeply subsidizing the terminals, or giving them away for free to encourage nationwide adoption of the technology.

With Americans charging more than $1.8 trillion a year on credit cards, the move could be yet another game-changer for Apple and the credit card industry in general. Indeed, an army of startups have been working on ways to make purchases easier and more rewarding for smartphone-wielding customers.

I wrote recently about the Bay-area startup Bling Nation, which has partnered with PayPal to test a RFID sticker that users could affix to their phones and use to make charges. Other companies are experimenting with key fobs, loyalty cards and NFC-enabled SIM cards.

The stakes are enormous as businesses start chipping away at the 2 percent+ cut credit card companies have been siphoning off purchases for decades. The progression from plastic to mobile makes perfect sense, though. Mobile phones are centralizing all of our tasks in one device. They’ve replaced watches, calculators, MP3 players, notepads, day planners and phone books. And that leaves just two more things in our pockets that phones will one day eliminate: wallets and keychains. Today the battle is being fought over the wallet, and the spoils in this war couldn’t be any larger.

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1 Comment

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