Apple's next iPhone will not feature Near Field Communications (NFC) technology that allows mobile phone users to pay for goods and services by simply waving their handset across a special contactless reader in a store.
However, the source also said Apple is working on its own version of NFC that will let users pay for goods and service via their iTunes account. It is thought a handset featuring the technology will hit the market in 2012.
It's unlikely that the successor to the iPhone 4 will have NFC technology embedded in the handset
It had been thought Apple was likely to include the technology in the next version of the iPhone, which is due out later this year, after the company hired Benjamin Vigier, who was previously product manager for mobile wallet, payment and NFC at mFoundry.
Google's latest rival to Apple's smartphone, the Nexus S, which is also the successor to Google's Nexus One 'superphone', is the first widely available handset to have the technology embedded in the phone.