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Apple in Payments: Bluetooth Edition

Apple held its annual developers conference last week to showcase its new features within iOS8. One area that still needs clarification is Apple’s intent for mobile payments.

In my first post, I touched upon Apple’s program for third party hardware attachment market as being significant and likely to be a key aspect of its payments approach. In this post I discuss these three things:

1. How Apple’s new security paves the way for mobile payments
2. Bluetooth being secured enough where Payments is a use-case
3. Why the iPhone 6 will not have NFC

At the WWDC 2014 event, Apple introduced a new specification for manufacturers in its MFi program (Made for iPad, iPhone and iPod) that allows them to create headphones that connect to iOS devices using a lightning connector instead of relying on the 3.5mm audio jack. Why is it important? Because as Apple looks to rid itself of any such remaining legacy vestiges, it’s also shedding any ambiguity around who is in control of the iOS hardware ecosystem and what it means to be a third party accessory maker – once reliant on open standards supported by all devices and now serving at Apple’s pleasure. It is a strategy that fits against the backdrop of an iOS ecosystem that is made up of software that is increasingly becoming more open, and hardware that is slowly being walled off – primarily in the name of security. The former is evident in how Apple has opened up third-party access to core authentication services like TouchID. What about the latter?

Apple’s new security blanket
Well, first let’s look at what Apple has publicly acknowledged about the MFi program. Every iOS device will initiate communication with a third-party accessory by asking it to prove sufficient authorization by Apple — to respond with an Apple-provided certificate, which iOS subsequently verifies. Further, the iOS device then issues a challenge, which is then answered by the third-party accessory by a signed response. These two steps require tha ...

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