The widespread adoption of mobile payments has proven to be a laborious task for the industry, but it is being indicated that the NFC retail payments market has made significant progress by now. A new report from Juniper Research projects that the NFC retail payments market will exceed $180 billion globally by 2017, more than a seven-fold increase over 2012.
According to Juniper, the leading regions of North America, Western Europe and Far East & China will contribute 90% of this market value. 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 average revenue per user as they commit to NFC-based payment projects.
In the case of NFC, one of the major applications supported includes contactless payment transactions. NFC comprises a set of standards for smartphones and other mobile devices to enable radio communication between them by touching the devices together or putting them in close proximity to each other. Juniper says last year was a watershed year for NFC payments. 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.
The report also pointed out that the market acceleration of 2011 revealed some parts of the ecosystem unprepared for the future, and the full potential of the market can only be fulfilled if all ecosystem players are equally committed and mobile wallet consortia remain in place.
NFC payment involves a change in user behavior and requires collaboration among stakeholders that includes banks, mobile carriers, card networks and merchants. As highlighted by Gartner in late May, it takes time for both to happen, so the firm doesn’t expect NFC payments to come into the mass market before 2015. In the meantime, ticketing, rather than retail payment, will drive NFC transactions. Gartner also mentioned that the mobile payments market will experience fragmented services and solutions for the next two years.