NFC Mobile Payments To Hit $100B In 2016

SmartPhone-BlackberrryA new forecast from U.K.-based ABI Research projects 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. Driving that vertiginous growth will be the convergence of different payment types -- proximity, P2P and online -- on one NFC-equipped handset to enable ticketing, retail and loyalty card transactions.

ABI predicts transportation and ticketing will be the first categories to benefit from this trend, with 26% of all NFC handsets to include a contactless ticketing application in 2017. Plus, transportation authorities will have the ability to offer other services, such as route planners, schedules and alerts, as well as related advertising opportunities.

Still, ABI acknowledges NFC-based mobile payments are still at least a couple of years away, with barriers remaining to wider adoption. “The business models have not yet been clearly identified and proven with no real-world case studies to demonstrate the potential returns,” said ABI practice director John Devlin. “Current MNO [mobile network operator] pricing strategies makes market entrance and investment difficult for potential partners.”

That uncertainty has kept operators from large-scale investments in NFC smartphones. Telefonica’s 02 mobile wallet and Barclay’s PingIt, for instance, have not included NFC functionality in their mobile offerings at launch. Given that skepticism, it’s hard to see how ABI projects NFC mobile payments will ramp up to $100 billion in four years.

The ABI report follows on the heels of a separate forecast from eMarketer projecting 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 20016. (That covers all point-of-sale (POS) transactions made using a mobile device at a register or by tapping a device to complete a purchase.

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, according to the eMarketer estimate. Among the mobile payments initiatives is Isis, an NFC-focused effort led by Verizon, AT&T and T-Mobile. The consortium this week confirmed the Oct. 22 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.

Other companies are not waiting for NFC to gain traction to tackle mobile payments. eBay, for instance, said during its third-quarter conference call Wednesday that it expects its PayPal unit to handle $10 billion in mobile payment transactions this year, up 150% from a year ago. In addition to its smartphone apps and PayPal Here service, the company is currently trialing a mobile wallet offering with stores including Home Depot, JCPenney, Office Depot and Toys “R” Us. 

 

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