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Setbacks for Deployment of NFC Mobile Payments

Juniper Research has shared its revised forecasts for the global mobile near-field communication (NFC) market, which now has scaling back its growth estimates for the North American and Western European markets.

While their latest market study finds that by 2017 the proportion of NFC-enabled smartphones will be only marginally below previous estimates, global NFC retail transaction values are now expected to reach $110 billion in 2017 -- that's significantly below the $180 billion previously forecast.

According to Juniper's assessment, the Apple decision to omit an NFC chipset from the iPhone 5 has reduced retailer and brand confidence in the technology, leading to reduced POS (Point of Sale) rollouts and less NFC campaigns.

This in turn will lead to lower NFC visibility amongst consumers and fewer opportunities to make payments, thereby creating a cycle of indifference to NFC technologies in the short term.

"While many vendors have introduced NFC-enabled smartphones, Apple's decision is a significant blow for the technology, particularly given its previous successes in educating the wider public about new mobile services" said Windsor Holden, research director at Juniper Research.

He believes that without the support of Apple, it will be even more difficult to persuade consumers -- and retailers -- to embrace what amounts to a wholly new means of in-store payment.

Apple's decision would have the mist impact on markets in North America and Western Europe, where transaction values would exhibit a two-year lag on previous forecasts as retailers delay their POS investments.

In contrast, retail transactions in the recognized NFC market leaders -- Japan and South Korea -- are likely to experience little or no impact from the short-sighted Apple decision.

It also observed that lower than expected adoption of Google Wallet, which is linked to a delayed launch of the ISIS NFC project in the U.S. market, would also have a negative effect on that market.

Other key findings from the market study include:
  • Despite Apple’s decision, NFC trial consumer feedback -- e.g. at the London Olympic venues and in Singapore -- has been extremely positive, suggesting strong latent interest when services are more widely deployed.
  • Both MasterCard and Visa have certified several NFC service solutions and datacentres, including those of Giesecke & Devrient and Gemalto.

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