Payments made using NFC-enabled handsets will account for $130 billion of worldwide consumer retail spending by 2020.
This equates to 254 million mobile users making 5 payments per month at an average of just below $9 per transaction.
New research from Strategy Analytics identifies the launch of Apple Pay as a key driver of this growth, but adds that similar offerings by other providers will also have a role to play. These will all drive the NFC acceptance by retailers, as will demand for a simpler payment experience by customers.
Widespread acceptance of NFC and contactless payments by retailers will be critical to the adoption and usage of NFC-based payments by consumers, the report said. If consumers can only use their NFC-enabled phones to make payments in a small fraction of shops then its usefulness as a method of payment is clearly compromised. Retailers were slow to consider the implications of NFC until the end of 2014, when the launch of Apple Pay stimulated the adoption of NFC-enabled point-of-sale (POS) terminals by US retailers.
“The launch of Apple Pay is significant because it means all major smartphone vendors support NFC-based mobile payments, but it also provides a credibility boost for the NFC payments sector as a whole,” said Nitesh Patel, director of wireless media strategies at Strategy Analytics. “Continued efforts by payment networks, for example MasterCard has set a target of all MasterCard payment points supporting NFC in Europe by 2020, will be crucial in stimulating its use and adoption.”
Despite Strategy Analytics’ positive outlook, NFC-based mobile payments will account for a single digit share of the multi-trillion dollar retail market globally by 2020, the report said, as traditional forms of payment (e.g. cash and cards) remain dominant.
“We don’t expect consumers to begin to leave their wallets behind until NFC POS becomes ubiquitous towards the end of the forecast period,” said David MacQueen, executive director of media and apps. “Even in countries like Japan and Korea, where contactless payment initiatives have been established for longer, mobile payment co-exists with cards and cash.”
“In order for NFC-payment to gain strong traction Strategy Analytics believes NFC-payments must add greater convenience for consumers, such as merging payments, loyalty point accumulation and coupon redemption into a single tap, while providing a platform for retailers to drive sales via targeted marketing or cutting costs,” MacQueen added.
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