A new report from Juniper Research has found that the NFC retail payments market will exceed $180bn (£116bn) globally by 2017 - more than a seven-fold increase over 2012. The leading regions of North America, Western Europe and Far East and China will contribute 90% of this market value as smartphones with NFC payment technology become standard.
The report, NFC Mobile Payments ~ No Contact Required, found that 2011 was a watershed year for NFC payments. Major technology infrastructure standards were finalised, many mobile network operators committed to the market and NFC payment pilots from both mobile operators and financial institutions transitioned to commercial service. Above all, NFC-enabled smartphone models were announced by almost all handset manufacturers and Google ignited the market by launching its wallet in the US.
The report warned, however, that the market acceleration of 2011 revealed some parts of the ecosystem unprepared for the future. In particular, retailers are less convinced of the benefits of NFC payments over existing card technologies and are unwilling to invest in contactless infrastructure so soon after the transition to chip and pin. Education and ‘win-win’ propositions from other ecosystem players are necessary to make retailers as committed to this opportunity as themselves.
According to report co-author Dr Windsor Holden: ‘This is a critical time for the NFC retail payments market. 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. Our report analyses the various consortia models being formed today and which types are expected to endure.’
Other findings from the report include the predication that more than one in four mobile users in the US and Western Europe will pay in-store using NFC by 2017; and mobile network operators can offset declining ARPU as they commit to NFC-based payment projects.