Brief:

• Apple plans to update the iPhone's near-field communication (NFC) chip, which handles secure wireless transmissions for services like Apple Pay, with a feature that would let customers unlock their homes and car doors and pay for mass transit fares, according to a report by The Information.
• The tech giant will announce the NFC capabilities at its Worldwide Developers Conference that begins June 4. Older iPhones made in 2014 or later will be able to unlock the features by downloading a software update, per Engadget.
• Apple employees already can use the new iPhone features to access offices and buildings at the company's headquarters in California. The company is working with transit card maker Cubic to expand the iPhone's abilities for handling transportation fares for people worldwide.

Insight:

The unconfirmed report about Apple's plans to expand the capabilities of the iPhone's NFC chip shows how the tech giant envisions its smartphone as a tool for a wider variety of secure functions. While iPhones have been equipped with Bluetooth technology to open smart locks, the NFC chip uses less power and can connect faster, according to Android Authority. Bluetooth has a greater signal range and works well for file transfers and connecting wireless speakers, though NFC's speed makes it more ideal for reducing the friction in contactless payments, opening doors or hurrying through mass-transit turnstiles.

Greater adoption of NFC-powered functions like mass transit passes may help to popularize the smartphone's role in making contactless payments, especially in markets like the U.S. where mobile payments have been slower to gain widespread consumer adoption. Instant peer-to-peer payments are common in countries like China, where some urban areas are nearly cashless. The U.S. has been comparably slow to introduce and adopt the technology, but the banking system is getting on board to avoid losing market share to fintech services that millennials and other tech-savvy consumers are more likely to adopt.

Apple has gradually expanded the functionality of the iPhone to make financial transactions. The company in December added its person-to-person payment service, Apple Pay Cash, to let U.S. users send and receive money through iMessages, similar to Paypal's Venmo, Zelle or Square Cash.

Meanwhile, Apple competitors like Amazon and Google have acquired companies that provide smart locks and other connected devices that interact with mobile apps while people are away from home. NFC, however, is generally considered a more secure option to Bluetooth-connected smart locks because it requires a closer range. This higher level of security may differentiate Apple from the emerging competition in the connected-home space.