Technology | Media | Telecommunications

Friday, June 06, 2014

Contactless Payment Users will Reach 300M by 2017

Since 2011, expectations have been high that mobile contactless payments -- enabled via Near Field Communications (NFC) -- would rapidly gain traction around the world. This has not come to pass.

Disagreements and uncertainties over business models and standards, combined with a failure to communicate the benefits of a transition to contactless, led to a cycle of indifference towards NFC.

Juniper Research has found that the number of consumers making contactless payments via their mobile handsets would reach 300 million globally by 2017 -- that's up from just over 110 million last year.

The Juniper global market study found that many markets were being seeded for mobile contactless adoption by accelerated rollout of contactless cards.

These rollouts were being accompanied by marked increases in contactless POS (Point of Sale) terminals, with leading vendors VeriFone and Ingenico both now shipping the majority of their terminals with NFC as standard.

Apparent Need to Educate the Market

However, the study findings cautioned that stakeholders needed to step up efforts to raise consumer awareness about mobile contactless payments and to educate retailers about the contactless value proposition.

"Contactless is largely being sold to retailers on the basis of faster throughput at the POS. The other critical opportunities offered by contactless – such as consumer engagement and product upselling – are much lower on their radar," said Dr Windsor Holden, research director at Juniper Research.

Meanwhile, Juniper believes that the lack of a coherent business model had constrained NFC rollouts, with the cost to deploy a mobile payment card more than to issue a plastic card.

Furthermore, while it claims that the anticipated launch of an Apple iWallet would create a positive halo effect for the wider contactless space, it was unclear at present whether additional POS upgrades would be required.


Other findings from the market study include:
  • HCE (Host Card Emulation) is enabling the provision of a remote SE (Secure Element), potentially reducing time-to-market and meaning that banks can retain control of their customers without needing to partner with mobile network operators.
  • NFC stakeholders need to absorb the cost of interim solutions and offer NFC stickers without charge to the end user.