NFC Rising

Posted by Kunal Arora on

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The big guns of mobile payments are set for a bumper year, with Juniper Research indicating m-commerce providers Apple, Samsung and Android Pay will attract over 50 million users by the end of 2017.

In their recently released report into contactless payments, the firm tips users adopting this handset enabled form of the digital wallet (OEM) will surpass the 100 million user mark by mid-year, rise to 150 million by the end of the year, and continue to gain traction.

Ultimately, they predict over 500 million users will be utilising the technology by 2021 when collectively Apple, Samsung and Android will command over 56 per cent of the near field communication (NFC) mobile payment market.

That's would represent a rise from 20 per cent in 2014 and 41 per cent in 2015.

"The research found that Apple Pay, and the alternative wallets that have followed in its wake, are set to establish themselves as the primary contactless mechanisms of choice in the US,” Juniper Research says.

“However, the challenge facing Apple and its rivals is to ensure that the infrastructure is in place for consumers to make in-store payments."

Apple continues to dominate the field, with a predicted 87 million users this year. Samsung follows with 34 million, while Android Pay is bringing up the rear with 24 million.

Not just Apple, Samsung, and Android

The rise of handset enabled payment systems is set within a framework of mobile and contactless payment technology that's increasing in general.

The research also found that 2015/16 were watershed years for HCE (Host Card Emulation) in terms of commercial service rollouts. Juniper estimates that at least 194 banks had introduced such services by the end of 2016.

They also note PayPal, already a behemoth in the online space, will rapidly deploy a portfolio of contactless payment and loyalty solutions that will allow it to compete effectively for market share.

Why the take-up?

The rise in contactless payments is being driven by three major factors; increased access to smart phones, adoption of EMV/ contactless technology, and mobile POS apps.

Smartphone - By the end of this year over two thirds (68%) of the US population will own a smart phone. That's 222 million people with apps and information at their fingertips on a daily basis.

Gartner forecasts that in 2017 U.S consumers’ mobile engagement behavior will push mobile commerce up to 50 percent of U.S. digital commerce revenue.

Contactless technology - Meanwhile in October 2015 the US followed other countries implementing a formal migration from magnetic stripe cards to chip and pin through an EMV liability shift.

Basically this meant any financial institution or merchant not using chip technology would be liable for the cost of counterfeit card transactions. The result has seen a massive uptake in card readers with contactless capability that can readily accept handset enabled payment methods.

Visa notes EMV card reader location quadrupled from 301,000 in August 2015 to 1.3 million in June 2016.

Mobile POS - Mobile Point of Sale apps like PayPal Here and Square POS are all taking advantage of the trend, rolling out card readers with contactless capability that are capable of taking digital wallet payments along with chip and pin cards on mobile devices.

What's in it for retailers?

In an age where speed of checkout and simple payment are all part of enhancing the consumer experience, digital wallets and contactless payments provide a convenient option in an increasingly cashless society.

Meanwhile, the ready access to affordable mobile POS via numerous apps and available hardware makes set up of a store more cost effective than ever before and more simple, with the only basic required items a contactless reader and mobile device.

The final word

In 2016 almost US $30 million worth of transactions were completed in America courtesy of digital wallets and mobile payments. That was three times the value of 2015 but a meager drop in the estimated ocean of what's expected to occur by the year 2020 when mobile transactions will reach US $266 million annually.

For retailers, providing access to these payment systems will be a necessity. In short, if you're not accepting mobile payments, you’re missing the modern commerce boat.


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