Gartner analyst Avivah Litan predicts that Near Field Communication or NFC payments will hit 10% of mobile payment in 2015 compared to SMS payments which will represent 50% of mobile payment around the world.
Dozens of new smartphones that run Windows (@Windows), Android (@Android), and Blackberry (@BlackBerry) launched last year included an NFC chip. However, Apple did not put NFC on its new iPhone 5, making a significant impact on the NFC industry.
Apple justified this by saying that iPhone 5 users can use its Passbook app which shows barcodes instead of NFC. On the other hand, Samsung took advantage of this with the application S Beam, making transfers possible through NFC.
Still, many analysts predict that NFC will be included in the iPhone 6 and beyond.
Google (@google) also use NFC on its Nexus S Smartphone with the application Google wallet Cloud. A Google official revealed that transactions doubled in the first 6 weeks after the launching of the app, which now runs on more than 10 different smartphones.
Barcode scanning is used by Starbucks (@Starbucks) and Dunkin’ Donuts (@DunkinDonuts) to subtract dollars from a virtual card on a cash-loaded Smartphone. Starbucks described this approach a success with over 26 million mobile payments made in December 2011. Starbucks integrates its digital payment cards with Apple’s Passbook and invested $25 million in Square.
NFC has been slow to catch on payments due to public acceptance, fewer NFC reader terminals, merchandising, wireless networking, and jockeying of competing banking groups.
According to Jack Gold of J. Gold Associates, NFC offers more capability than optical scanning, and will evolve beyond its present limitations.
- NFC payments will hit 10% of mobile payments and 50% of SMS payments in 2015
- Juniper Research predicted in June 2011 Global NFC mobile payment will reach $50 billion worldwide in 2014. Some 20 countries are expected to launch NFC services in the next 18 months.
- Yankee Group predicted in June 2011 that 7 million NFC-enabled phones will increase to 203 million in 2015.
- IE Market Research predicted in July 2010 that NFC will cover one-third of the global payments, approximately $1.13 trillion
- Frost and Sullivan predicted that 53% of new handsets (863 million) will be NFC-enabled in 2015, exceeding 110 billion Euros or $145 billion of payment value
- Calent calculated that China will have 169 million mobile contactless payment users, making it the largest mobile-payments in the world
- IDC foresaw that worldwide mobile payment through NFC will increase from $600 million in 2012 to $273 billion in 2017
- Juniper Research also predicted 1 in every 5 smartphones or almost 300 million will be NFC-enable in 2014.
- Juniper Research and other estimated that there will be 20% of NFC-enable smartphones in 2014.
- Aite group estimated that only 2% of businessmen have NFC reader terminals, thus Apple skipped NFC in the iPhone 5
Avivah Litan, Analyst for Gartner: “We’re still on the edge when it comes to NFC innovation. It will take a decade before it’s mainstream across the globe.”
Rick Oglesby, Analyst for Aite Group: “That doesn’t mean NFC is going to be the definitive winner. It’s very possible that the situation could turn into a VHS vs. Beta thing, where barcodes are faster to market, become second nature to consumers and therefore consumers never move to NFC.”
Bob Egan, Analyst for The Sepharim Group: “The mobile payments ecosystem is extremely fragmented. Even Apple can’t figure out how to control the ecosystem to maximize profits.”
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Will NFC technology be embraced by the public? If so, how long will it take before NFC technology be part of mainstream payment culture? We invite you to share your thoughts about NFC and innovative payment methods, here, via twitter or on our Facebook page.