Near-field communication (NFC) powers most forms of mobile payments, an industry that has exploded in recent years. The NFC market is growing in lockstep with the payments market, as more retailers and consumers incorporate mobile payments into their regular shopping habits.
Overall, the NFC market is expected to reach $21.84 billion by 2020, or a 17.1% compound annual growth rate (CAGR), according to new data from research firm Markets and Markets.
NFC is used in wearable tech, phones, cameras and many Internet of Things (IoT) connected devices. It works by creating a magnetic field to allow devices to communicate with each other when they are within ten centimeters of each other.
The retail industry currently dominates the NFC market — in 2014, the retail industry accounted for 60% of the total market. Many retail owners support the use of NFC point-of-sale terminals that will allow customers to pay by tapping a device.
North America currently holds the largest market share, but the Asia-Pacific region is the fastest-growing area of the world.
The biggest barrier to mobile payment technology adoption in the U.S. is user concerns with security. Payments have gotten a lot of publicity, but not as much real-world support from users.
Some services are hoping to ease the transition, like Samsung Pay, which is able to emulate the magnetic stripes of credit cards, so that users can just hold their devices up to the card reader and pay that way.
Google took it one step further recently and started beta testing a service that allows people to pay just by telling a cashier “I’d like to pay with Google.”