The Latest iPhone Update Delivered A Huge Boost To Apple's Bid To Dominate Mobile Payments


Apple just launched its latest update to iOS 7, the software that powers the iPhone and iPad, and it includes a potentially huge improvement to its iBeacon software that helps Apple in its bid to control in the future of mobile commerce.


The idea behind beacons is that they use Bluetooth connections to send messages directly to people's smartphones, meaning that Apple and other retailers can use them to push location-based flash deals, give product info, or simplify mobile payments.

Coupled with TouchID, Apple's fingerprint security on iPhone 5S that makes mobile payments super-secure, an iBeacon network could dominate brick-and-mortar retail if it becomes widely adopted.

Apple is leading the pack with beacon technology because it has enabled almost all of its iOS 7-running devices to both send and receive beacon signals. Other companies, like PayPal and Qualcomm, make dedicated pieces of low-cost hardware that retailers can use to send signals.

So what changed in iOS 7.1? If you have an app installed, it will now "look" for beacons and receive notifications even if it's shut down, the site Beekn discovered.


Before, you'd have to at least have an app running in the background for it to be able to "hear" beacon signals. This gave retailers who wanted to use iBeacon technology two major hoops to jump through: They first had to convince users to download their dedicated app, and then they needed to prompt people to open up that app once they walked into a store so that their phones could receive beacon signals as they shopped.

Now, even if you haven't opened an app since the day you downloaded it, you will still receive proximity-based messages that will pop up on your iPhone's lock screen, as long as you have Bluetooth on and location-data enabled.

This change might seem subtle but the implications are huge. iBeacon developers now have much more incentive to make apps that use beacon technology because they don't have to worry about the extra hurdle of prompting users to open those apps when they're shopping. There's less of a barrier for mainstream adoption. Plus, now that Apple has made the plunge into increased notification capabilities, it shouldn't be long until other companies using beacon technology follow suit.

This, in turn, opens the door for more huge leaps forward in simplified mobile commerce. One idea is that beacons could trigger an automatic payment when a person leaves a specific location, making that payment effortless for shoppers, while helping retailers gather boatloads of valuable customer data. Retailers who use a combination of beacon technology and mobile payments will have more data on consumer patterns, behaviors, and preferences.

For Apple, that's where TouchID technology - which lets you unlock your phone using your fingerprint -comes in. Although most people think of TouchID as simply a way to keep other people out of your phone, it also makes the iPhone the perfect, secure mobile payments device. Earlier this year, Apple's iTunes chief Eddy Cue met with industry executives to talk about expanding the mobile payments system to let people buy items at retail locations using their phones.


Apple's iBeacon technology will track your in-store location and TouchID will let you pay from your phone when you're ready to leave the store: It's a killer combo. There are dozens of other mobile wallet apps out there and it's worth noting that Samsung's latest Galaxy S5 phone will come with fingerprint scanning, too.

In order for this mobile payments future to be realized, though, consumers need to get used to the beacon shopping experience and the unbidden real-time notifications that go with it. Getting comfortable with beacon messages means actually starting to receive them. Apple's latest update will allow more retailers to start opting into iBeacon technology, which means more shoppers will be seeing their notifications, which, in turn, leads to more shoppers becoming used to the beacon experience.

"This update shows Apple's continuing to innovate the way beacon technology will be used going forward," says Business Insider Intelligence reporter, Tony Danovo.