Apple LogoAccording to the Financial Times the announcement of Apple’s move into payments is expected soon, as part of its most anticipated product launch since the death of its co-founder Steve Jobs nearly three years ago. For a company that feels most at home when unveiling a piece of hardware or connected service over which it has full control, this is new territory.

True, the credit card details it holds for some 800m iTunes and App Store customers give it a formidable foot in the door. But consider the obstacles it needs to overcome. It will have to join a complex ecology of payments companies, merchants and mobile carriers, all of which have reasons to look nervously over their shoulders about encroachment from a voracious tech giant such as Apple.

There is also a serious chicken and egg problem when it comes to infrastructure. Outside of Europe, Apple’s chosen technology – near-field communications – is far from pervasive. Retailers will not have an incentive to install NFC readers at their cash registers until enough shoppers want to wave their phones to pay, and shoppers will not have any reason to do that until the readers are in place.

And there is the biggest challenge of all: how to get shoppers to change their behaviour when they generally seem quite happy to swipe a plastic card. Apple, more than any consumer technology company, has held back from introducing technology for technology’s sake. Its habitual hesitation about entering markets is an eloquent statement of its view that just because you can, does not mean you should.

The slow start made by other so-called “mobile wallet” and contactless payment systems using smartphones shows the wisdom of that forbearance. Google’s attempt to leap ahead three years ago with its own contactless payment service linked to a mobile wallet fizzled.

It is hard to see why the timing is any better now. Waving cards rather than swiping them may be something that commuters have become used to doing on public transport systems, but it is hardly a habit that has entered the mainstream with handsets. Apple might be hoping to ride a wave of hardware upgrades that is due in the US as merchants shift to new chip and pin terminals, though this will take a long time to introduce.

Against that background, the arrival of iPhone payments will be an intriguing test of Apple’s ability to play a new type of game. The razzmatazz at next week’s event is likely to be reserved for new hardware such as a large-screen iPhone and Apple’s first gadget designed to be worn on the wrist.

Source:  Financial Times