iBeacon is a technology in Apple’s new OS that determines a phone’s position in a retail store using the technology of innovative companies like Estimote and Indoors. Introduced in Apple’s latest iPhone 5S, iBeacon uses active devices to both send and receive data over Low Energy Bluetooth (BLE). Since BLE relies on battery power, it can function at much greater distances than NFC can. With its roots in RFID technology, many NFC applications use passive tags requiring no battery whatsoever (they draw enough power from the phone’s device to function with enhanced security). Only transmitting over a few centimeters distance is not a constraint of NFC but a feature. The action of holding the phone close to the other device should be seen as a mechanism for ensuring the content is delivered to a user who consciously opted into it, whether it is in a consumer facing application such as payments or enterprise solution such as equipment maintenance. In this respect NFC is a pull technology where BLE pushes content to users without them opting in.
BLE on the other hand was designed to resolve a device’s physical position indoors without excessive battery drain. By sensing with centimeter accuracy it can provide rich analytics to merchants regarding in store browsing trends. In this respect it solves more of a merchant problem than a consumer one. With BLE imagine walking into a store and without any action your phone displays content. This was never the point of NFC which was meant to deliver content on demand (by tapping the NFC tag). Again, this proximity only approach is ideal for contactless payments, however it was never meant to locate a device. BLE can also authorize payments, and from farther away. With Apple now into the retail payment space, there is perhaps an opportunity for POS terminals with all contactless options and legacy support such as mag-swipe and chip and pin.
Naturally, indoor positioning has been a very attractive space, highlighted by Apple’s purchases of companies such as WiFiSlam. The data are useful in retail stores where location metrics can provide insights into store traffic. This is as excellent angle into mobile contactless payments while leveraging the iTunes pervasive payment platform.
Without iPhone support NFC will find its niche in many enterprise solutions that lend themselves to close proximity interactions. Since BLE is a longer range and battery powered it is also more expensive than NFC tags which are passive and can be placed anywhere. While merchants may complain that NFC payment infrastructure is still miniscule in the U.S, there is still thousands of NFC payment terminals in the U.S compared with few using BLE. Outside the U.S there are regions where NFC as a payment method is already common. As such there is proven basis that NFC as a payment platform can succeed while BLE is relatively unproven in that space. Although BLE can facilitate payments, the early selling point of the technology seems to be accurate indoor positioning with the promise to provide relevant content at all times leading to purchases. Assuming all that, then BLE can close the entire loop by allowing one to pay using PayPal or iTunes and simply walk out of the store. Only in that final step is BLE infringing on NFC’s core strengths, and it will succeed even without it. On the other hand, payment is done quite well with NFC using a platform that has a vast head start in the retail POS space. Indoor positioning on the other hand was never a problem that NFC was meant to solve.