Dive Brief:

• Apple’s iOS 11 update will open its near-field communications (NFC) chip, which handles wireless interactions with nearby devices like a mobile payments reader, to app developers that can expand the iPhone’s location-based functions, according to a document for developers on the company's site. Apple’s prior versions of the system only allowed wireless check-ins with its Passbook electronic wallet or contactless transactions with Apple Pay.
• The expanded NFC capability means that iPhone apps could be developed to let a consumer wave a smartphone near merchandise in a store to get more product information or to receive promotional offers. Products need to have an NFC tag in order for an Apple device to sense it nearby.
• Apple hosted its annual developer conference this week and demonstrated new uses for NFC in the next upgrade for Apple Watch, including the ability to connect to gym equipment and transfer fitness data like heart rate and calories burned during exercise. 

Dive Insight:

Apple, the world’s most valuable company with a market worth of $812 billion, is constantly scrutinized for its technological advancements, some of which haven’t lived up to consumers' high expectations. Apple Pay launched in the fall of 2014 as one of the first NFC-based payment schemes from a major mobile platform. However, nearly three years later, mobile payments in general haven't had much traction among retailers and smartphone owners and only 13% of iPhone users have Apple Pay activated. 

Opening up Apple's NFC chip to developers could help drive use through experiences that bring added convenience and value to consumers. For example, loyalty has proven to be a strong match with mobile, giving users, whose phones are always nearby, an easy way to accrue and redeem points without having to remember to carry a loyalty card with them. 

Apple has a 15% share of the global smartphone market and a loyal following of users who will appreciate added functionality. In explaining how developers can use NFC, Apple said, “Your app can read tags to give users more information about their physical environment and the real-world objects in it. For example, your app might give users information about products they find in a store or exhibits they visit in a museum." IPhones also could replace NFC-based keycards for hotels or mass transit passes in some cities.

Building more NFC experiences for the iPhone could boost the overall market for NFC tags, which have been around for years but have not caught on widely. 

With the opportunities provided by NFC also comes some challenges. NFC tags create a unique capability for marketers to interact with customers seamlessly in very specific locations, like store aisles. While many consumers might like the idea of receiving real-time product discounts or personalized promotions while shopping in stores, others may see this type of advertising as another annoying intrusion.