NFC Mobile Payments to Hit $100B in 201624 Oct, 2012 By: Doug McPherson
LONDON – Mobile payments powered by near field communications (NFC) will jump from $4 billion this year to more than $100 billion by 2016 and hit $191 billion in 2017, predicts ABI Research, a U.K.-based research company.
Mobile payments – and more importantly the convergence between payment types of proximity, P2P and online stored on a single NFC handset – will drive the growth across several markets, including ticketing, retail, loyalty and access control.
ABI says market convergence isn’t quite ready for mass commercial rollout, but the potential value add that NFC brings has been identified. Smart card and IC vendors, device OEMs, MNOs, partnering service providers, and payments networks are all set to benefit if convergence is successful.
“Market convergence is at least two years away from reality. We believe transportation and ticketing will be the first market to benefit from convergence, with 26 percent of all NFC handsets forecast to house a contactless ticketing application in 2017,” says Phil Sealy, an ABI analyst. “Transport authorities will be able to offer additional … services, including route planners, delay bulletins, time tables, as well as retail and loyalty, or advertising applications offering own brand or partnering business a platform to offer additional solutions to generate new revenue streams.”
Insiders say a number of barriers and limiting factors that need addressing before convergence success: business models have not yet been clearly identified and proven with no real-world case studies to demonstrate the potential returns; and current MNO pricing strategies makes market entrance and investment difficult for potential partners.
The ABI report comes after an eMarketer forecast that projects the total transaction value of mobile payments in the U.S. will reach $640 million this year and grow almost tenfold to $2 billion in 2016, which includes all point-of-sale transactions made using a mobile device at a register or by tapping a device to complete a purchase.
eMarketer predicts the average mobile payments user will spend just $62 a year on their phones this year, but that amount leaps to $1,294 in four years. Among the mobile payments initiatives is Isis, an NFC-focused effort led by Verizon, AT&T and T-Mobile. The consortium confirmed a launch of its long-awaited trial in Austin and Salt Lake City on Oct. 22. By year’s-end, it said as many as 20 “Isis-ready” handsets would be in the market.
Some companies refuse to wait for NFC. eBay said last week it expects its PayPal unit to handle $10 billion in mobile payment transactions this year, up 150 percent from a year ago.