Mobile NFC payments to exceed $130B by 2020: report
A recent study conducted by Strategy Analytics revealed that payments made with near field communications-enabled mobile handsets are set to exceed $130 billion of consumer retail around the world by 2020.
Contactless payments have been gaining more momentum since Apple Pay was released this year, prompting many top retailers and brands to integrate with the payment platform. Strategy Analytics predicts that consumers’ desire to use the convenient platform will result in 254 million mobile device users participating in 5 NFC payments a month.
“Apple will do a good job in educating iPhone owners about Apple Pay, from how to set-it up (e.g. load card details) for payments through to how to and where to can use it,” said Nitesh Patel, director of wireless media at Strategy Analytics, Milton Keynes, United Kingdom. “Partnering with the major issuers definitely helps spread the message more effectively.
“The launch of Apple Pay will focus the minds of operators and competitors like Google Wallet, who have NFC-based payment offerings for longer, but have not really communicated or marketed it well to their customers.”
While some consumers still remain wary about undertaking mobile payments and having their financial information transmitted wirelessly, demand for payment platforms in mobile applications is steadily rising and will increase even more in 2015. Strategy Analytics believes that widespread adoption of NFC payments by major retailers and brands will be the catalyst to fuel usage by customers.
Mobile device users will only use contactless payments regularly if a majority of stores offer the option, thereby offering quick checkout processes and the convenience of not needing to carry cash or credit cards around.
Retailers have been relatively slow to incorporate NFC payments into their stores, but Apple Pay’s rising star will likely catapult them into the forefront of mcommerce in the near future. Strategy Analytics claims that Apple Pay offers a degree of credibility to contactless payment solutions.
“Retailers and brands can benefit from NFC acceptance by enabling their own apps for NFC, via HCE or joining established mobile wallet ecosystems, in addition to introducing in-store NFC marketing,” Mr. Patel said. “We believe integrating payment, loyalty and offers into a single tap, much like Google tried (but failed) to introduce with ‘SingleTap’ can help streamline the POS experience for consumers.”
Co-existing with wallets
Ultimately, analysts believe that NFC payments will continue co-existing with physical as well as mobile wallets until contactless payments become ubiquitous near 2020. Technologically-savvy countries such as Japan and Korea that have dabbled in this type of mcommerce before still see mobile payments function alongside physical currency.
Strategy Analytics warns marketers that their NFC payment platforms must highlight convenient features to customers, such as loyalty point accumulation, merging payments and single-tap coupon redemption. On the commerce side, brands can leverage the platform to drive sales with targeted marketing efforts or cut costs based on data feedback.
The rising popularity of beacon technology may also raise awareness and adoption rates of contactless payments. As consumers become more comfortable with the idea of opting in to receive customized retail offers and store maps, a quick checkout process will no doubt be right around the corner.
However, next year will likely be an experimental time for beacon technology as brands integrate it in-store and test consumer response.
“We see NFC geared towards in-store payment and pull-based marketing while Beacons will be about improving engagement with consumers via a (push/opt-in) model,” Mr. Patel said. “Retailers will continue to experiment with beacons in-store during 2015 while NFC/contactless acceptance will mainly be deployed as part of POS upgrades.”
Alex Samuely is an editorial assistant on Mobile Commerce Daily, New York