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85pc of terminals shipped worldwide will be contactless-enabled in 2016: study

August 11, 2011

Eighty-five percent of terminals shipped worldwide will be equipped to process contactless payments in 2016, according to a recent study by ABI Research. 

Although there will be a increase in sales made on mobile devices at stores, the analyst firm believes that it will be gradual and consumers can expect to slowly see mobile payment terminals rolled out. The study predicts mobile payments in three categories – point-of-sale terminals, ATMs and vending machines.

“For customers, simply waving an NFC-enabled cell phone, contactless card or contactless key fob in front of a POS terminal with contactless capabilities is important as it has the potential to substantially reduce the time spent queuing,” said Craig Foster, senior analyst at ABI Research, London.

“The general trend from cash-based to cashless societies has meant that many consumers carry insufficient cash or no cash at all to pay for merchandise,” he said.

“As this sort of technology becomes more widespread, consumers are less likely to be carrying a multitude of cards around, which could be seen as much more convenient.”

Quick queue
The study points to several new NFC-enabled smartphones on the market and Google Wallet as examples of mobile payment services that have increased consumer awareness of mobile payments.

According to a 2010 study by ABI Research,  only 10 percent of point-of-sale terminal shipments included contactless payment functions.

“For retailers, I’d say the benefit [of mobile payments] is much more clear-cut – increased revenues,” Mr. Foster said.

“By offering the consumer payment flexibility and increased convenience, they are more likely to have a consumer pass through the point of sale,” he said.

However, the firm disagrees with some of the industry reports claiming that one-third of all U.S. terminals will be contactless-enabled in the next year because although the technology is undoubtedly increasing, consumers are not on board with mobile payments enough yet for it to become as prominent as the reports suggest.

In particular, the increase in mobile payments will come from contactless cards and the growing adoption of NFC-enabled phones, per the report.

Three mobile payment companies are outlined in the report that ABI believes will be strong competitors in the space – VeriFone, Ingenico and Hypercom.

According to the report, Ingenico saw 21 percent of the company’s shipments in 2010 come from contactless terminals.

VeriFone recently acquired Hypercom.

Instant goods
In addition to a rise in contactless payments at retail stores and ATMs, the report also looked at the use of mobile and vending machines.

Mobile is a simple solution to vending machines because it fits with the instant speed and ease associated with the machines.

Additionally, small transactions do not need to be verified by a signature or PIN entry, making mobile payments on vending machines an instant fix.

“I expect that the number of cellular-enabled POS terminals, vending machines and also ATMs, will increase steadily, although not to the same extent as contactless,” Mr. Foster said.

“Smartphone- and tablet-based POS terminals will also increase in popularity, slightly cannibalizing the overall market for wireless POS terminals,” he said.

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