The Wall Street Journal has reported that Apple Inc. considered adding mobile payments and NFC technologies to its most recent iPhone 4S model. The idea was considered early in the development of the phone but was discarded over concerns about the complexity of creating a mobile wallet, as well as worries that NFC technologies might affect battery life and the size of the handset. Questions about the security of NFC also figured in the decision not to include the technology on the iPhone 4S.

Instead, Apple opted to forego a "fully functioning" mobile wallet using NFC, something to compete with Google Wallet, and released its Passbook app. Passbook is a "mobile wallet lite" that allows users to store tickets, discounts, coupons and loyalty programs within the app but doesn't provide the ability to make payments at the point of sale. The app was announced at Apple's annual Worldwide Developer Conference last month.

According to the WSJ article, the decision to build a stripped down mobile wallet was also based in part on Apple executives' desire to wait for the market to develop while consumers and merchants slowly adopt mobile payments and while early entrants slug it out.

Apple characteristically did not comment on the story, but the Journal quoted Phil Schiller, head of marketing for Apple, from a recent interview in which he said Apple would not compete with digital-wallet mobile-payment services who are "all fighting over their piece of the pie."

What this all means for the future of mobile payments and NFC on the iPhone 5, due to be released this fall, is unknown. Rumors are already flying that NFC will be included on the new phone. But the Journal's contention that device size and battery life are concerns for Apple would point towards the company not including NFC in the iPhone 5. Sources report the next iPhone version is an even thinner device, meaning that room on the phone for an NFC antenna and chip may be very limited.