In just five years, the near-field communication (NFC) mobile payments market will be a whopping seven times what it is today – so service providers better not be left behind.
A new report from Juniper Research says the NFC market will jump to $180 million by 2017 as this payment technology becomes standard on smartphones. The leading regions of North America, Western Europe and Far East & China will contribute 90 percent of that value.
2011 was a turning point for NFC payments, Juniper said. Major technology infrastructure standards were finalized, many mobile network operators committed to the market and NFC payment pilots from both mobile operators and financial institutions transitioned to commercial service. Most importantly, NFC-enabled smartphone models were announced by almost all handset manufacturers and Google ignited the market by launching its wallet in the U.S.
The prediction, however, doesn't come without a warning. Retailers are less convinced of the benefits of NFC payments over existing card technologies and are somewhat unwilling to invest in contactless infrastructure. So there's some convincing to do.
“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."
The report also found that one in four mobile users in the U.S. and Western Europe will pay in-store using NFC by 2017. Mobile network operators can offset declining ARPU as they commit to NFC-based payment projects.