According to a new study from Juniper Research, the global market for mobile payments, with the help of NFC-enabled devices will exceed $180 billion by 2017, a seven-fold increase compared to 2012.
At the same time, leading regions in this area, which include North America, Western Europe, the Far East and China, will accumulate about a 90 percent return on the present market as subscriber devices with support for NFC-payments have become standard in these areas. The report also predicted that by 2017 every fourth mobile phone user in the United States and Western Europe will pay for goods and services with the help of devices that support NFC.
According to the survey, last year was instrumental in the development of payments through NFC, with the emergence of standards for technology infrastructure, the commitment of many operators, NFC payment pilot projects carried out by mobile operators as well financial institutions have accelerated the transition to commercial services through NFC.
Windsor Holden, co-author of the study, said NFC payments will become increasingly important for retailers, and is essential in terms of building brand relationships.
Smartphones fueling growth
Many of the latest smartphone models from manufacturers are pre-installed with NFC technology and a payment model. NFC chips have already been featured in latest Android devices including the Samsung Galaxy S3 and HTC One series. Google with Google Wallet has also been instrumental in developing NFC. The latest rumor is that the next, highly anticipated iPhone will also support NFC payments as well, which will undoubtedly bring mobile payments to a new standard level of access and usability.
A similar report from TechNavio predicts that the Global NFC PoS Terminal market to grow at a CAGR of 17 percent over the period 2011-2015. One of the key factors backing this growth is the increasing need to minimize point-of-sale (PoS) overheads and NFC chips loaded in smartphones and feature phones.
Another study from Canadian-based provider of market intelligence services, IE Market Research (IEMR), said that global mobile payment market revenues will rise from $47.2 billion in 2011 to $998.5 billion in 2016.
Not a standard yet
Experts say that the accelerated development of the market in 2011 has revealed some of the constraints for NFC growth and standardization. Not all market participants are equally prepared to join in the development of NFC-payment technologies.
In particular it concerns retailers, many of which will not benefit from contactless mobile payments in comparison with the existing card technology. Consequently, some players are showing less enthusiasm to invest in the infrastructure of contactless payments, especially given that not so long ago they had to revamp their infrastructures in a transition towards the use of chip & PIN technology.
“This is a critical time for the NFC retail payments market,” said report co-author Dr. Windsor Holden. “Despite the significant progress being made today, the full potential of the market can only be fulfilled if all ecosystem players are equally committed and mobile wallet consortia remain in place”, he added.
Lack of information on NFC can also create market barriers. For example, in Britain there were in circulation about 20 million contactless cards, but most people do not know how to use them, Holden said.
There’s a lot of moving parts in the mobile payments industry, and NFC still has a way to go before it becomes a global standard. Despite its promise of convenience, security and infrastructure obstacles remain in its path. Nevertheless, there’s high hopes for NFC technology, and those that stand to benefit the most from its standardization are incentivizing the necessary infrastructure changes to push them through the rest of the ecosystem.