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So there was this guy, a busker, and he was playing the most beautiful guitar. I didn’t have any cash on me, so I went to tell him I liked him but had no money. He told me he could take a small payment by phone, if I liked.

“After all,” he said, “even if you’re sleeping on the streets you can still pick up a phone.” I gave him a dollar just by passing my iPhone near his phone.

A fantasy? Maybe, but Apple’s iPhone seems on course to finally open up the market for near field communications technology, with RFID-based, highly secure, paperless payments. What follows is a selection of ideas, which seemingly lead to this mobile payments mardi-gras.

Apple was first reported to be testing RFID iPhones last year.

There’s already several iPhone-as-payment-system offerings for merchants. Indeed, the $100 million iPhone developer KPCB’s iFund is thought to have invested in some of these systems.

Now, speculation suggests Apple may intend kick-starting this sector, beginning with the acquisition of contactless/near field communications tech firm, VIVOtech.

The speculation begins at Bloomberg, where IDC analyst, Will Stofega, reportedly suggested VIVOtech could become a potential Apple acquisition target, citing recently revealed Apple patents for mobile purchasing and touch-screen technology.

Returning to Vivotech. The company already has over 600,000 contactless point-of-sale readers in use globally.

Former Vivotech exec, Todd Ablowitz, president of the Double Diamond Group, thinks Apple may be after those 600,000 points of sale to kick-start its payment plans.

A long way since SoundJam, iTunes has become Apple’s media and apps management, discovery and acquisition solution. And it’s not just sitting on the shelf. iTunes already holds the account details of 100 million customers, and already has a payment processing system capable of scaling between small sub-dollar payments all the way to more.

“If they want to build a payments ecosystems, what would be a better target?” Ablowitz said, speaking to Payments Source.

Computer World, May 4, 2010