Apple to Add NFC Functionality to iPhone and iPad [REPORT]

Apple will add NFC (near-field communication) capabilities to its next generation iPhone and iPad, claims Richard Doherty, director of the consulting firm Envisioneering Group.

NFC is a form of wireless data transfer over short (up to 4-inch) distances, which could be used to make purchases with a mobile device. If Apple ties the technology with customers' iTunes account, making purchases might become as easy as swiping your phone over a specifically designed sticker or payment terminal.

According to Doherty, Apple is thinking of starting a mobile payment service as early as mid-2011, integrating it into iTunes and adding the familiar concept of loyalty credits and points into the service. Apple has already designed a prototype payment terminal, Doherty claims, which may be heavily subsidized or even given away to small businesses, jump starting the service.

At first glance, NFC may not seem like a big deal, but making payments simpler and easier makes a world of difference, which Apple already demonstrated with the success of its App Store. Turning the iPhone and the iPad into digital wallets opens up a myriad of possibilities that can potentially mean billions in revenue for Apple.