An article in 9-5 Mac outlines Apple's iBeacon technology very comprehensively. In many ways, iBeacon is Apple's answer to its open standard equivalent NFC - the obvious difference being that Apple owns this core technology. Apple is taking advantage of Bluetooth Low Energy (LE). It would allow customers to not only make contacts payments (as NFC can only be activated in extremely close proximity) but connect to the "internet of things" and get a much more personalized shopping experience.
The one-sentence summary is that you can think of iBeacon as like GPS for indoor locations, your phone able to pick up the iBeacon transmissions and work out where it is with a high degree of accuracy. You could, for example, drive into an iBeacon-equipped underground parking garage, park your car there and then have an iPhone app direct you back to your exact parking space when you’re done shopping...
Things get a step more interesting with personalised offers. If you’re a member of that store’s loyalty program, it could know what you usually buy there and offer a discount tailored specifically to your tastes. Or a department store might know you’re a gadget addict and alert you to the arrival of the latest new toy, the app offering to direct you through the store to the exact location of the gizmo. When you get there, it may offer to show you a video on your phone of the device in use.
The idea is that Bluetooth LE ties into Apple's existing technology/ecosystem better. In-store payments could be authorized via the new fingerprint reader or PIN code, wirelessly. Customers wouldn't even have to purchase their items at the register. The only barrier for Apple is adoption. 9-5 Mac explains that NFC is an established technology shipping in many devices. Is there room of an NFC competitor? Well Apple certainly has the cash to put behind the technology. If enough people own iOS devices, banks and retailers will have to adopt the technology due to demand.
Apple has one major advantage, however. The iPhone 4s to present, more recent iPod touches, and newer iPads all have Bluetooth LE built in. Apple planned this long in advance. NFC has been "expected" to be mainstream since 2010, but only now are devices shipping with this technology built in. In contrast, Apple can literally "flip a switch" and have 150 million iOS users using iBeacon.
As both 9-5 Mac and Tech Bytes have mentioned in the past, NFC vs iBeacon (or BT LE) is not unlike VHS vs Betamax.