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NFC payments to reach $180B by 2017: study

July 24, 2012

Near field communication is slated to gain some traction over the next five years, according to a new study from Juniper Research.

Juniper Research’s newest report, “NFC Mobile Payments & Retail Marketing: Business Models and Forecasts 2012 – 2017,” takes a look at how NFC will play a role in the overall advancement of mobile payments. In addition, the research also looks at which regions will contribute to the greatest growth of the technology.

“I think the critical finding is that over the last 12 months or so, we have seen a fairly dramatic up scaling in NFC activity from across the value chain – from vendors, carriers, OTT providers, financial institutions and merchants,” said Dr. Windsor Holden, principal analyst at Juniper Research, Hampshire, England.

“There are far more NFC-enabled handset models in the market, NFC standardization has been achieved and security issues have been largely resolved,” he said. “Increasingly the supporting infrastructure is being rolled out – the task that now lies ahead is educating the consumers in the use of the technology.”

Pay on mobile
The $180 billion value marks an increase of more than eight times the value of NFC in 2012, showing the quick uptick in the technology.

The Juniper Research report found that North America, Western Europe, the Far East and China will be the main areas that will fuel NFC payments. These areas will contribute to 90 percent of the market value.

Specifically, approximately 35 percent of activity will come from Western Europe, 30 percent will come from North America and the Far East and China will make up 26 percent.

Emerging markets will also play an increased roll in the widespread attraction of NFC.

Additionally, more than one in four mobile users in the United States and Western Europe will make in-store payments via NFC by 2017.

According to the report, two of the major contributors to the growth in NFC in 2011 came from the introduction of Google Wallet and more NFC-enabled smartphones were rolled out into the market.

The report credits Google Wallet as being a leader in the space because it works with one manufacturer – Samsung. The technology also only works with Sprint and used multiple credit cards and retailers to help launch the technology.

Mobile obstacles
Despite the growth, however, certain industries such as retail might not be prepared for the technology.

Specifically, the report claims that retailers are not ready to back the infrastructures that mobile payments require.

Other factors that may hinder NFC include making sure that both users are ready with strong customer care services behind the technology.

Although mobile payments have gained some footing, especially internationally, consumer education has consistently been an issue and will continue to be a problem in the future.

However, with more companies investing in mobile payment services, the competition will help gain mainstream awareness of the technology.

“There are two trends we’ll see here – the first is that the mobile will increasingly be used as a hub, enabling brands and retailers to marry their digital and physical assets,” Dr. Holden said. “It’s more than simply a payment mechanism – it’s a means of enabling brands to build consumer loyalty, by using the technology to push them coupons or discover new products.

“The second is that we may well see some migration from remote mobile payments to point-of-sale using NFC,” he said. “At the moment NFC accounts for less than 10 percent of all mobile payment transactions – we’d expect that to more than double by 2015.”

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York

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