The other big mobile commerce technology is NFC. What was your reaction to the iPhone 5 not having NFC capabilities?
Schwan: We weren't expecting it to. With NFC, people don't realize that it's not just Apple that has to be ready. All these retailers have to be ready for the strategy to work. We don't think NFC is going to be the answer. It requires too much of an overhaul from an installation and infrastructure standpoint, in order to be widely adopted in the near-term.
I think Apple is playing it perfectly.
Passbook is allowing Apple and retailers to lay down the appropriate processes and infrastructure to support a full-blown wallet strategy. Passbook is a barcode approach-or QR [Quick Response] code-driven approach-and so adoption is going to much more rampant.
Apple is waiting, too. If there was huge NFC adoption, and [NFC] readers were going in at all major retail locations, then Apple's strategy may shift to support it. But that's not happening. So Apple is going with the lowest common denominator approach, which is the barcode.
If and when Apple does come up with an NFC chip, I think that the development community will get some hints so that they could start developing in advance.
(There's more to NFC than mobile payments, writes CIO.com Senior Editor Al Sacco. Check out his six future uses.)
Barcodes have been around for a while. Will retailers need to add anything to support Passbook?
Schwan: They may need to replace a one-dimensional scanner with a new two-dimensional scanner that tends to read reflective screens well. A lot of big retailers have already made that investment and have two-dimensional barcode scanners.
But retailers still need to iron out their processes to support paying redemptions with phones, everything from getting two-dimensional scanners at all the registers to facilitating business processes. It's one thing to get up to the counter, and the retailer doesn't really know how to redeem your coupon on your phone, verses a retailer who can't accept the payment. The former is a little more of a challenge than the latter.
The Passbook approach allows [retailers] to work out the kinks before full-blown mobile payments and mobile wallets are exposed.
What needs to happen for Apple to take Passbook to the next step?
Schwan: There's only a small handful of apps supporting Passbook right now. We're going to need to see broader support from application providers. It's not trivial: There's a server-side component to exposing that service, as well as the client-side on the phone component.