Could a mobile wallet for iPhone 5 be on the cards for Apple?

Could a mobile wallet for iPhone 5 be on the cards for Apple?

New SEC filings suggest Apple pushed hard to quickly close either a licensing or acquisition deal with embedded security vendor AuthenTec

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New SEC filings suggest Apple pushed hard to quickly close either a licensing or acquisition deal with embedded security vendor AuthenTec, leading a range of bloggers and pundits to conclude that Apple plans to introduce AuthenTec's fingerprint sensor in the upcoming iPhone 5, and possibly a full digital "wallet" capability.

But how quickly these elements are introduced depends on Apple's long-range plans for iPhone, and iPad, as well as the maturing of the mobile payments industry infrastructure, a big jump in consumer acceptance and - most of all - trust in the new technology, and how quickly Apple can phase these particular technologies into its supply chain and manufacturing processes.


The fingerprint sensor, many speculate, will be a key part of a full-fledged mobile "digital wallet" using a near-field communication (NFC) radio link to trigger purchases by simply waving the handset over an NFC reader. AuthenTec, an established vendor of a range of smart sensors, identity management (including PC/laptop fingerprint sensors), and embedded security products, announced the deal on 27 July. At $365 million, it's Apple's biggest buy.

(There are actually three parts to the deal: the acquisition itself, which will make AuthenTec an Apple subsidiary; a separate $20 million intellectual property and technology deal, which gives Apple the right to acquire non-exclusive licenses and certain other rights on hardware technology, software technology and AuthenTec's patents; and a 270-day option on whether to license hardware, patents or software on a perpetual non-exclusive basis, for another $115 million.)

This month, AuthenTec filed required paperwork with the federal Securities and Exchange Commission (SEC), revealing new details of its talks with Apple. TheNextWeb's Matt Brian read the filing and, perhaps reading too much into it, concludes that Apple is likely to incorporate into iPhone 5 (and the "iPad Mini" if there is one) AuthenTec's 2D fingerprint sensor, and associated software, for a range of mobile commerce applications, including payments, presumably via an NFC radio link. Both devices are now widely expected to be announced on 12 September, though nothing has been announced by Apple.

"Will we see fingerprint technology in the new iPhone (or iPad)?" Brian asks. "It seems almost certain. AuthenTec specializes in a number of security products and software that theoretically could have made their way into Apple's production line or code branches. Details are scarce but its desire to use the technology and see it developed quickly leads us to speculate that we could see it in just a matter of weeks."

MacDailyNews at once began the echo chamber amplification that exemplifies Apple rumoring, by adding in its headline a detail that Brian never mentioned: "Apple's iPhone 5 to include fingerprint sensor in Home button?

The SEC filing upon which this speculation is based is available online

AuthenTec had started shopping a "new technology" to consumer electronics vendors in late 2011. Apple was the only one to start talking with AuthenTec in detail. The filing shows that Apple moved back and forth over the next six months from wanting to license the new AuthenTec technology - which in one reference is clearly the 2D fingerprint sensor formally announced in May 2012 - and to buy the company and its intellectual property outright.

Brian notes that the AuthenTec filing makes it clear that Apple kept pushing, and working with, AuthenTec to sustain the sensor development and adapt it to Apple's specific requirements during these protracted negotiations. "If AuthenTec was developing a technology for Apple's new products, would the deal need to have been completed 'quickly' if it wasn't going to be used in devices launching later this year (or mere months after negotiations began)?" Brian asks.

Brian clearly believes that Apple's desire to quickly consummate the deal reveals that the AuthenTec fingerprint sensor will be included in the new iPhone and other Apple products expected to be announced this fall.

This may be possible. But without knowing Apple's longer-term plans for the iPhone, nor the intricacies of incorporating new technologies into the Apple supply chain and manufacturing processes, these arguments could just as well fit for the introduction of a more fully developed, secure, wireless mobile commerce capability in 2013, with the "iPhone 6." It might even be possible to add the fingerprint sensor for limited uses on iPhone 5, and expand on those capabilities more fully in 2013 and later.

There have been rumours and speculation for well over a year that Apple was about to introduce a mobile digital wallet, and add an NFC radio to the next iPhone. At the unveiling in June of iOS 6, Apple emphasized a new application called Passbook, which is a central storage area for loyalty cards, tickets and coupons that today fit into a physical wallet. A number of pundits have speculated that Apple plans to develop Passbook into a full-blown digital wallet, using the AuthenTec fingerprint sensor as the biometric authentication for user identity and for payment or charge authorizations.

But mobile commerce isn't as simple as writing a native app for photo sharing: It's set of relationships between separate parties, at both the point-of-sale (or -action) and at the back end for billing, clearing and debiting/crediting accounts. And making sure these relationships "just work" in a simple and reliable way for the end user is only one part of it. Securing each of these interrelationships is equally complex. And mobile transactions today remain a tiny fraction of those done with credit and debit cards, not to mention cash.

And Apple clearly has options on rolling out these technologies: It may indeed present iPhone 5 with a fingerprint sensor, but initially it may be "limited" to functions that are not related to a digital wallet: It could be used to unlock the phone or log into an iTunes account; or for using the phone as a secure electronic "key" for wireless door entry, or interacting with a variety of smart tags.

That would give Apple another year more or less to develop a more mature mobile wallet capability, test it with the evolving mobile payments infrastructure, and work out the supply chain and manufacturing issues. And maybe more importantly, it would give the majority of consumers, not just early adopters, another year to decide about, and trust, mobile commerce.

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  • Wahlometer oh my god not in the home button see leaked iphone5 backside upper left has a rectangular cutout sensor to be placed there behind the glass Thats why the iphone5 has bicolor metalampglass back Thats why the headphone jack went down to other side The sensor will be on the back right where your pointing finger rests
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