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By Mani) Great tech companies create and lead in new categories. Apple, Inc. (NASDAQ: AAPL) has created or redefined product categories four times with the Mac, iPod, iPhone, and iPad—an amazing record.

With smartphone market maturing, profitability and sales depend on continued innovation Although Apple says that innovation is in its DNA, creating new categories is difficult. Finding large opportunities to provide growth following the unique success of the iPhone appears nearly impossible.

Apple's patent applications are one indication of the company's potential product plans, but they are not perfect predictors. Patent applications are published about 18 months after the application.

By looking at Apple's patent filings, one could see that the Cupertino-based company would be a big beneficiary of potential evolution in the payment space.

"Our view has been that Apple's design focus would produce an e-wallet that is the easiest to use, most streamlined, and best integrated product in the market," UBS analyst Steven Milunovich wrote in a note to clients.

Apple's patent US20130124319A1 is related to "Payment Options Based On Location." Apple has also filed related patents with the US Patent office including US8255323 Motion Based Payment Confirmation and others related to NFC "Shopping" in 2010. All these indicates that Apple may develop a robust payments application that features a smart, multi-layered menu system that is context-sensitive and incorporates geotracking.

With Passbook, it seems Apple is beginning the process of integrating wallet functionality into its operating system in advance of the next payments wave. NFC will be a central element as could some sort of biometric authentication.

Apple's often-discussed Authentec acquisition could enable mass adoption of mobile payments using NFC-enabled mobile phones (i.e., next generation iPhones with NFC radios and secure elements) and biometrics (fingerprint reader) to enable highly secure dual-factor authenticated mobile payment transactions.

"These phones could serve as a secure substitute for traditional card-based POS transactions and remove higher-risk/higherpriced "card not present" transactions from the mobile payments ecosystem," Milunovich said.

Recall how recent security exploits involving the iPhone's screen lock undermined trust in the company's security capabilities and drew focus to Apple's future in mobile payments.

"By linking biometric authentication to mobile payments on the iPhone, Apple could leverage its existing iTunes user base of more than 500 million users and its emerging Passbook application to make a rapid impact in payments," the analyst said.

Meanwhile, Apple may not be the first to integrate either NFC or fingerprint technology onto a mobile device as the Google Nexus S, released in 2010, was the first to enable NFC payments; and Fujitsu's AES1710 mobile phone released in 2008 offered AuthenTec's fingerprint sensor security.

Apple may be the first to marry one of the most secure authentication methods available (biometrics/fingerprints) with one of the most secure ways to authenticate a payment transaction (NFC plus something else as a dual factor—just like Chip and PIN).

As noted above, one key competitive differentiator for Apple is its current iTunes installed base of 500 million plus iTunes accounts and 250 million iPhones, which makes rolling out additional features and functionality considerably easier.

"With regard to payments, we believe Apple will not try to displace the existing payment networks, since it already likely pays relatively low interchange and network fees given the sheer volume of purchases it brings to the networks (and which are batched multiple times per day to further lower transaction costs), and payments are not a core Apple competency," Milunovich noted.

Apple likely is more interested in collecting detailed customer data that can be used for advertising, tracking, target marketing, or some other future function that has not yet become apparent. However, it may try to bring a robust ecosystem to merge all the features necessary for a smart payment application.