Telecoms Tech

A report from Juniper Research has revealed that the mobile payments and NFC market will exponentially increase and eventually exceed $180bn in five years’ time – a sevenfold increase over this year.

Just over a third of that figure (35%) will be generated by Western Europe, with North America (30%) and the Far East and China (26%) trailing behind.

To put it into context, Juniper forecasts one in four people from Western Europe and the United States will use NFC as a payment mechanism by 2017.

“This is a critical time for the NFC retail payments market”, said report co-author Dr. Windsor Holden.

“Despite the significant progress being made today, the full potential of the market can only be fulfilled if all ecosystem players are equally committed and mobile wallet consortia remain in place”, he added.

Barcodes on steroids or the new Betamax?

Earlier this month, with the news of Deutsche Telekom’s potential collaboration with Google Wallet for a payment app, TelecomsTech mused the possibility that NFC could “have the potential to be a game-changer” in the mobile payments market. Google Wallet, of course, is NFC-enabled.

The acceleration of NFC cannot be faulted. The report notes that “there is no doubt that the enthusiasm for NFC payments is growing”, while also quoting one vendor who called NFC “barcodes on steroids”.

Despite this, the report wasn’t completely positive.

In particular, Juniper noted that merchants were still to be convinced of NFC’s benefits compared to existing payment systems, especially with the relatively recent advent of Chip & PIN, and are therefore unwilling to invest in the nascent technology.

But could it be noted that NFC isn’t exclusively for the payment apps marketplace? Reports that Nintendo, for instance, are going to feature an NFC chip with their Wii U next-gen console show the wide-ranging potential of the technology.

Similarly, Juniper said that “the NFC dimension has brought with it a degree of complexity which has tended to offset the natural elegance of NFC interactions”.

This complexity is arguably down to a variety of factors, including mobile wallet readiness, user readiness and questions over customer care.

It’s worth noting too that it’s not a one-way street for NFC. PayPal, a competitor for Google, is looking into a non-NFC app, naturally called PayPal Wallet.

Research house Yankee Group claimed in April that NFC was not going to be “the next Betamax” because of “a compelling differentiator”.

“Its tap-and-go concept is a game-changer,” said senior analyst Nick Holland at the time, adding: “By contrast, most non-NFC solutions require consumers to launch an app, optically scan, enter a PIN.

“NFC eloquently does away with all that, making the user experience simpler, more pleasurable and universal."

PayPal’s non-NFC system, in contrast, does require an upgrade from the retailer’s end but they are investigating the possibility of conducting transactions with the aforementioned ‘tap-and-go’.

So which is the more important factor for payments; simplicity or elegance? Is this truly a watershed for NFC becoming the de facto mobile payment method or not?