An Israeli company is poised to cash in on one of the new products and technologies Apple just announced. Its Apple Pay system is ideal for Rosh Pina-based On-Track Solutions (oti), a major player in the mobile wallet business. With Apple announcing that a new NFC (near-field communication) solution for mobile payments will be built into the new iPhone 6, 6+ and Apple Watch, oti said that it would bring the same capabilities to older iPhones, via add-on hardware.
That was enough for investors to bid up the price of oti’s shares on the NASDAQ, and oti stock was up some 75% at one point Wednesday before settling down by the end of the trading day.
Although less “glitzy” than the hardware products announced by Apple at a conference Tuesday, like Apple Watch and iPhone 6, Apple Pay may yet have as big an impact as other Apple devices. There are plenty of mobile wallet technologies around, including Google’s formidable Wallet platform, but similar to the MP3 player and digital music business before the advent of the iPod in 2001, mobile wallets have just not taken off. If history is any indication, Apple’s presence in the wallet space – just like its presence in the digital player and music space – is likely to fundamentally change that business.
One reason is that even before introducing the platform publicly, Apple was hard at work signing up retailers to use the service. In addition to the 258 Apple retail stores in the US, some of the leading retailers in America plan to support Apple Pay, including Bloomingdale’s, Disney Store and Walt Disney World Resort, Duane Reade, Macy’s, McDonald’s, Sephora, Staples, Subway, Walgreens and Whole Foods Market, OpenTable, Panera Bread, Sephora, Starbucks, Target and others — and that’s just to start.
The platform will support credit cards issued by most of the large US banks, including Bank of America, Capital One Bank, Chase, Citi and Wells Fargo. According to Apple CEO Tim Cook, these banks handle 83 percent of credit card purchase volume in the US.
The new iPhones will contain an NFC band. NFC, or near-field communication, is a communication technology used primarily in mobile wallet systems. Users will just point the top of the phone at an NFC reader and tap a fingerprint reader on the device, replacing ID codes and CCV numbers usually used in credit card transactions. The system has several layers of security other than touch, and no data is stored in the device at all. The payment information will be drawn from encrypted data on Apple servers.
At the end of 2013, there were about 60 million iPhones in use in the US – and, of course, none of them were from the iPhone 6 series. While millions are likely to buy the iPhone 6’s when they begin to go on sale this weekend, oti-supplied NFC payment solutions are likely to be popular among users of older devices who don’t want to upgrade just yet, the company believes. The oti WAVE, the company says, is an NFC device that plugs into the iPhone’s audio jack. WAVE runs on Java-based software over a secure element and provides open application interfaces (API) for third-party development, so any apps that make use of Apple Pay will be able to include a module for oti’s system.
The system uses advanced security technology to ensure that transactions are safe and has been approved by major payment companies, including Visa and MasterCard. WAVE can also work independently from the iPhone for making quick payments, such as at mass transit turnstiles, oti said, noting that WAVE is already commercially deployed at various global financial institutions, and it’s in pilot deployments with mobile operators and mass transit providers.
Another oti solution for iPhones is the company’s NFC Insert, comprised of a thin film NFC antenna that connects to the iPhone operating system via the SIM card. The antenna folds onto the backside of the iPhone, where it is protected by any standard case. Several mobile operators around the world are currently piloting this product, which oti calls “cleverly unobtrusive.”
“With the launch of Apple’s iPhone 6, the oti WAVE becomes the leading cost-effective solution for existing iPhone and iPad models that enables secure NFC payment transactions,” said oti’s CEO, Ofer Tziperman. “Apple’s adoption of NFC technology is a strong validation of our long-term vision and investment in NFC technology, as well as that of our partners and business customers,” he said.
“We expect Apple’s NFC-equipped iPhone 6 and Apple Watch will drive stronger demand for our NFC readers in the unattended and self-service market,” he added. “We remain ideally positioned in this growing market with the most comprehensive and cost-effective solutions, which are certified by all major payment card associations.”