A report by Juniper Research has revised transaction forecasts downwards for the global NFC (near field communication) market, significantly scaling back its growth estimates for the North American and Western European markets from $180 million to $110 million by 2017.
According to the research firm, in five years the proportion of NFC-enabled smartphones will be only marginally below previous estimates, but Apple’s decision to omit an NFC chipset from the iPhone 5 has reduced retailer and brand confidence in the technology, leading to reduced point of sale rollouts and less NFC campaigns. This in turn will lead to lower awareness amongst consumers and fewer opportunities to make payments, threatening a cycle of ‘NFC indifference’, despite positive feedback from a trial during the Olympics games held in London over the summer.
In Ireland contactless payment over NFC in enabled Visa debit cards has begun rolling out in convenience stores with a maximum transaction limit of €15.
"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 report author Dr Windsor Holden. "Without their support, it will be even more difficult to persuade consumers – and retailers – to embrace what amounts to a wholly new means of payment."
The report found that Apple’s move would impact most dramatically on markets in North America and Western Europe, where transaction values would exhibit a "two year lag" on previous forecasts as retailers delay POS investments.
Conversely, retail transactions in NFC’s heartland in Japan and Korea are likely to experience little or no impact from the decision. It also observed that lower than expected adoption of Google Wallet allied to a delayed launch of the ISIS NFC project in the US would also have a negative effect on that market.
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