It’s been long-rumored that Apple will release two iPhone 5 successors in 2013, including a device called the “iPhone 5S,” which is said to showcase new security features like an embedded fingerprint sensor in the phone’s signature home button. But the introduction of new security technology may finally allow Apple to utilize its many unused patents for near-field communication, including those related to its mobile payments solution called the iWallet.
On Thursday, the U.S. Patent and Trademark Office released a new patent application that offers more details about Apple’s iWallet technology, which has been published in previous applications dating back to May 2010. The new filing discusses “a method for conducting a financial transaction,” as well as methods for letting users take pictures “using a camera of a portable electronic device” and sending that data to a remote terminal to conduct a financial transaction, using either wireless communication, NFC, or both.
In other words, users could potentially use the iPhone 5S to deposit money into their bank accounts by taking pictures of checks and instantly sending the codes to the their financial institutions, but with credit card information attached to one’s account, the iWallet could also allow for peer-to-peer financial transactions, similar to PayPal.
Apple’s iWallet technology requires strong security, since it was originally designed to provide real-time authorization for transactions where the cardholder isn't present during credit card transactions. There are six major components to iWallet:
- Credit Card Profiles – iWallet would allow iPhone 5S users to see their available credit cards attached with the ability to open up each individual card's full profile, which includes monthly statements, messages and alerts from the bank, and preferences for adding additional cards. Within one’s preferences, iPhone 5S users can set payment alerts days in advance, or let the user know when their balance is approaching the limit.
- Parental Controls - Parents would be pleased to know that the iWallet has restrictions to prevent their children from overspending. Under the parental control preferences, parents can set spending limits on their kids -- either per transaction or overall -- and can even restrict which merchants their children can purchase from. When a child exceeds his or her monetary limit set by the parent, the transaction can then request an authorization from the parent (via their iPhone), or simply decline the request. It's extremely easy, and it gives total control to the parents to let them manage family funds.
- Authorization Requests - A potential flaw with the iWallet’s parental controls is that kids or teenagers attempting to make many purchases could create too many iWallet Authorization Requests. To filter through all of these notifications, Apple gives the cardholder several options, including automatic authorization for all missed requests, or just certain requests under a specific value, or just requests with a specific merchant, like Barnes & Noble or Apple.
- Flagging Fraudulent Purchases - When a cardholder finds fraudulent activity on their account, it's always best to contact the authorities right away. Unfortunately, most people don't know their card has been stolen until they receive their monthly billing statements. The iWallet aims to give the user greater awareness of their financial status and facilitate contact with authorities when fraudulent activity is suspected or found. In iWallet, users will have the ability to flag any purchase in the same way a user flags an email. When a purchase has been flagged, the cardholder's bank is immediately notified, and the bank will quickly get in touch with the cardholder to discuss the situation further and offer instructions. While there's no easy way to prevent theft, iWallet provides a great way to nip problems in the bud.
- The iTunes Hub - Users don't want to handle all of their financial transactions on a tiny 4-inch iPhone 5S screen, so Apple's patent involves a new tab in iTunes called MobilePay, which lets credit card owners see all of the credit cards in iWallet at a glance. Similar to the iPhone 5S version of iWallet, users can monitor their statements, bank messages, and recent purchases; alerts and parental controls can also be set here, too. MobilePay will be an option you can toggle "on" within iTunes once the platform becomes available. Setting up MobilePay in iTunes requires cardholders to submit their credit card information, including their card number, name, address, and eligibility. At that point, users can sync their credit cards on iTunes to their iPhone 5S to automatically push new data to the phone.
- A New Mystery Gesture - Apple wants iWallet to be as safe and secure as possible, so the company has reportedly added another way for users to approve their purchases. Instead of filling out a simple CAPTCHA, iWallet will reportedly feature a brand new gesture, known currently only as a “Motion Based Payment Confirmation.” One could only guess what the gesture will be, but I would guess something simple, like drawing a check mark.
iPhone 5S Rumors: How Apple Will Protect The iWallet
Of course, all of these iWallet features would be impossible if the iPhone 5S didn’t have the means to protect its users’ information, which is why Apple rushed in July to acquire Florida-based AuthenTec, which was floating around its new smart sensor technology to several electronics companies at the time including Nokia, Motorola and Samsung, for $356 million. Apple, however, was the only company that wanted to help develop the technology in addition to licensing it.
According to an SEC filing, AuthenTec mentioned that its "portfolio of products has significantly expanded during the past two years and now includes smart fingerprint sensors, area sensors, fingerprint sensor chipsets and modules, USB fingerprint readers, identity management software and embedded hardware and software products and services." But AuthenTec's most prized, noteworthy product, the "Smart Sensor," is likely what Apple was after.
At just 3mm high and 1.3mm thick, AuthenTec's first Smart Sensor, which was announced in May (right around the time Apple upped its efforts to buy the company) crams a 500 ppi, 192x8 pixel detection matrix and all the fingerprint matching technology necessary to accurately and securely detect and encrypt data about your finger.
"Semiconductor-based sensors are based on both capacitive and radio frequency technology that detects an image of the fingerprint ridge and valley pattern beneath the surface of the skin, thus capturing sharp and clear fingerprint patterns from the live layer," AuthenTec says about its technology on its website. "This approach, which is in marked contrast with optical, thermal and other solutions that simply read the surface of the skin, gives AuthenTec sensors significant advantages in image quality and in the protective coatings that the sensor can image through."
Furthermore, AuthenTec's "anti-spoofing technology" ensures that only real fingerprints are read by measuring the unique properties of the skin on your finger and translating those traits into digital data that's then compared with the "expected [fingerprint] properties."
But that's not all; AuthenTec's technology is so smart, it can differentiate your fingers so as to associate different functions with those fingers. For example, you can use different fingers to play music, or ask for directions, or call a particular contact.
If Apple can integrate this Smart Sensor technology into the iPhone 5S, the phone’s screen would also be able to differentiate between various fingers, allowing users to pull off even more gestures for more specific actions. In the same way that touching different mouse controls with keyboard functions perform different actions on the computer, Apple could use AuthenTec's fingerprint sensing technology to greatly expand the number of possibilities on iOS devices to improve overall interaction with devices. Patently Apple offers a fantastic description of how this biometric fingerprint technology could enhance iPhone activities like e-commerce.
Considering the urgency with which the AuthenTec deal was made as well as Kuo's strong track record, there's a great chance users will experience AuthenTec's fingerprint sensing technology for the iPhone 6, which is allegedly coming later this year.
iPhone 5S Rumors: What Other Features Will Apple Include?
The iPhone 5S, which is said to look nearly identical to the iPhone 5, will reportedly release with an Apple-built A7 chip, as well as major additions to the iPhone 5's camera and flash -- “perhaps featuring Sony’s 13-megapixel sensor,” according to iLounge editor-in-chief Jeremy to Horwitz.
But besides new processors and security features, the iPhone 5S will likely release with a brand-new display currently in development at one of Apple’s suppliers, Taiwan-based Innolux Corp. (TPE:3481), which has reportedly licensed Sharp’s proprietary IGZO display technology.
IGZO displays, as noted by Tom's Hardware, are extremely thin, power efficient, and tough enough to handle even higher screen densities than Apple’s Retina display, which is visually stunning on its own. IGZO displays can reportedly handle display densities north of 330 ppi; comparatively, the new iPad 4 can only achieve 264 ppi.
In late December, Asymco analyst Horace Dediu and DigiTimes both mentioned Apple’s alleged investment in the ultrathin IGZO displays produced by Sharp, predicting the inclusion of the technology in Apple’s next batch of iOS devices, including iPhones and iPads. Dediu also pointed to Apple’s recent $2.3 billion investment in “product tooling, manufacturing process equipment and infrastructure,” believing the cash was used to help bail out Sharp, which had been in financial straits last year. Sharp is reportedly going “all in” on IGZO technology, so it’s possible Apple saved Sharp to leverage its investment in the next generation of displays.
Apple is facing stiffening competition from its rivals at Samsung Electronics Co. Ltd. (KRX:005935), Google Inc. (NASDAQ:GOOG) and even the Microsoft Corp. (NASDAQ:MSFT), so the Cupertino, Calif.-based company will need to pull out all the stops for its iPhone 5 successor as it hopes to maintain a high level of customer interest in an increasingly crowded smartphone marketplace.
Apple will announce its second-quarter earnings after the close of trading on April 23; in its first fiscal quarter ended Dec. 29, the company sold 47.8 million iPhone units.
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