Retail in-store payment capabilities are evolving with near-field communication (NFC) for point-of-sale (POS) terminals. NFC is a secure wireless technology that enables two devices in close proximity to exchange data. It's used for a variety of applications, including contactless payments.
The market for NFC-ready POS terminals continued to show momentum in 2016 with annual shipments anticipated to reach an estimated 16.1 million units, according to the latest worldwide market study by Berg Insight.
Retail Payments Market Development
The attach rate for NFC was highest in EU28+2 and the North America regions, where 93 percent and 92 percent respectively of the POS terminals shipped featured NFC.
NFC was also a popular feature in many other major markets worldwide -- including Brazil, Turkey and China. On a global basis, almost three out of every five POS terminals shipped in 2016 included NFC.
Berg Insight projects the global installed base of NFC-ready POS terminals will grow at a compound annual growth rate (CAGR) of 17.9 percent from 45.0 million units in 2016 to 86.9 million units in 2020.
As a result, more than 77 percent of the world’s POS terminals will be NFC-ready in 2020 -- that's up from 46 percent in 2016. That said, while the installed base of NFC-ready POS terminals has grown quickly, the contactless technology may have not been activated.
This scenario is changing, and Berg Insight estimates that approximately 15.0 million POS terminals accepted contactless payments with Visa payWave, MasterCard PayPass or UnionPay Quickpass in mid-2016.
"The mPOS terminal market is growing faster than the traditional POS terminal segment and there are more than 80 vendors active on the global market today" said Johan Fagerberg, senior analyst at Berg Insight.
Note, mPoS is the use of mobile devices -- such as smartphones or media tablets -- that function as a point-of-sale terminal to facilitate payment card transactions via a connection to a card-accepting reader.
Outlook for NFC and mPOS Adoption
According to the Berg assessment, the attach rate for NFC in the mPOS segment is anticipated to reach 45 percent in 2016 as NFC-ready mPOS terminal shipments reach 8.2 million units.
They now forecast that global shipments of NFC-ready mPOS terminals will grow at a compound annual growth rate (CAGR) of 41.0 percent in the next four years to reach 32.4 million units by 2020.
The growth is being driven by the increase in mPOS terminal shipments from 18.0 million units in 2016 to 42.3 million units in 2020, as well as by a growth in the attach rate from 45 percent to 77 percent.