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NFC to take mobile payments by storm

Posted: 19 May 2011     Print Version  Bookmark and Share

Keywords:NFC-enabled  cell phone  shipments forecast 

IHS iSuppli predicts that the market for NFC technology for mobile payments will grow from just about 5 crore units in 2010 to almost 55 crore units per year by 2015. The NFC penetration projections have been revised based on recent efforts by U.S.-based cell phone carriers.

A faster market ramp, by about 10 crore units per year from 9.32 crore units in 2011, is supported by the recently announced agreement of three major U.S. wireless carriers to partner with leading credit card companies on a mobile commerce initiative, IHS iSuppli said.

AT&T, Verizon and T-Mobile have said they would work with Visa and MasterCard on their Isis joint venture, which was established to form a nationwide infrastructure for NFC-enabled mobile payments using mobile handsets in the U.S. The original announcement of the Isis joint venture in November 2010 did not include Visa and MasterCard.

With the participation of Visa and MasterCard, the Isis system will allow consumer credit card information to be securely stored on cell phones, and will use NFC as the communication protocol to facilitate the financial transaction.

The changes to the Isis initiative together with Google's efforts to promote mobile payments with Android smartphones, has prompted IHS iSuppli to increase its forecast for global shipments of NFC-equipped cell phones. IHS now predicts 9.32 crore NFC-equipped cell phones will ship worldwide in 2011, up from the December forecast of 7.98 crore. In 2014, 41.18 crore NFC cell phones will ship, compared to 22.01 crore in the previous prediction. Shipments then will rise to 54.47 crore in 2015. This means that 30.5 per cent of all cell phones shipped in 2015 will have the capability to conduct mobile commerce using NFC technology, IHS predicted.

Worldwide forecast

Worldwide Forecast of Cell Phones with Integrated NFC Capability.

"By partnering with the dominant players—Visa and MasterCard—the wireless carriers are making the right moves to create an ecosystem that will allow consumers to become comfortable with making NFC payments through their cell phones," said Jagdish Rebello, director and principal analyst for communications and CE with IHS. "The carriers hope to leverage the dominant position enjoyed by Visa and MasterCard in credit card payments to ensure a seamless consumer experience when customers use their cell phones to make payments. Such a move will drive an increase in unit shipments of cell phones with embedded NFC capability in the U.S. and around the world."

With NFC, consumers can pay their bus fare, buy a plane ticket or make an ATM/credit card purchase simply by holding their cell phones near wireless terminals.

Visa and MasterCard's move to participate in Isis represents an attempt by the credit card companies to prevent Google from gaining a strong foothold in the market for mobile payments, IHS said.

With the addition of the major financial firms, the Isis effort is set to gain momentum over the long term. However, Isis is facing some short-term delays while it recalibrates its mobile payment strategy to suit Visa and MasterCard. It has delayed a Salt Lake City trial of the NFC technology from early 2012 to the third quarter of 2012. Similar trials are already underway in Nice, France and nine other major cities. In Nice the trial is supported by four carriers—Orange-France, SFR, Bouygues Telecom and NRJ Mobile.

- Peter Clarke
  EE Times

For more statistics and forecasts, click here.

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