Apple is rumoured to be including a Near Field Communication chip in their new iPhone 5. This allows communications for up to 10cm away (much like Mastercard’s tap and go system) between the iPhone 5 and a supported device. Not only for accepting payments, a NFC chip also paves the way for additional communications between the iPhone 5 and supported devices as well as other iPhone 5s. As always this is still rumour and no official word from Apple yet.

NFC facilitates the transmission of data over a range of approximately 10cm. An NFC-enabled chip in a mobile phone can interact with a proximity card reader to make mobile payments.

Speaking at an Australian Information Industry Association (AIIA) briefing this morning, the two founding members of user experience and research firm Mobile Experience discussed both the possibility of Apple partnering with PayPal for mobile payments and the possibility of the Cupertino giant going it alone.

Rod Farmer of Mobile Experience said that a potential partnership with PayPal for iPhone-enabled NFC payments has the possibility to be as, if not more, successful than Google’s Wallet product, which has been created in partnership with Citibank and MasterCard.

“[An Apple-PayPal partnership] offers the shortest path between two points for a consumer in terms of spending. You don’t have to worry about merchant banks [and] you don’t have to worry about the network … there are fewer mouths to feed, there are fewer existing relationships that need to be altered,” Farmer said.

He added that Google Wallet’s current partnership with MasterCard could present a problem in future, as Google may have aligned itself with a potential competitor that continues to “aggressively” grow its market share in the contactless card market.

However, Farmer’s colleague and co-founder of Mobile Experience, Oliver Weidlich, thought that Apple would likely go it alone if it equipped an iPhone with an NFC chip.

“I actually don’t think Apple needs PayPal. They’ve got 200 [million] credit card-enabled iTunes accounts. They can just bypass [PayPal],” Weidlich said.

There is still no guarantee that the iPhone 5 would even have an NFC chip built-in, but if the iPhone 5 was released sans-NFC, PayPal itself has previously said that the payment technology would be unlikely to reach critical mass for consumers.

“You need that first trigger for [retailers and merchants] to follow,” said Laura Chambers, PayPal’s director of mobile.

The inclusion of NFC in a device like the iPhone would make the technology mainstream, and lead to a wider take-up in the merchant and retailer space, Chambers added.

Rumours now place the iPhone 5 on track for a September release in the US.

News article sourced from ZDNet Australia