In the intervening years we find that mobile phones have remained by far the most important potential and actual focus of NFC. The technology is particularly suitable for them. Disappointingly, some people are still worrying about its speed compared to transport smart cards
, though Mifare for Mobile from NXP
gives transport card speeds. Some worry about the difficulty of using financial cards, including ones emulated in an NFC phone or tablet, in closed transport systems where it is not a single transaction but an entry-and-exit transaction with knowledge of location and therefore distance travelled on railways and subways in particular. However, solutions to this are already in use as with the Cubic
scheme in Chicago. Others solve it other ways. Progress with transport systems is slow but the leader in transportation ticketing, Cubic Corporation
tells us that, "a significant percentage of transportation ticketing will be by (NFC) mobile phones in future".
Many trials of many potential uses of NFC continue to be created but they tend to be a poor indication of what happens at rollout. To say contactless cards are NFC is playing with words: they predate NFC and would succeed if NFC had never been invented. Let us look more closely at these and other aspects.
Today many e-commerce payments consist of little more than keying in numbers from a card and such card-not-present transactions are a major cause of fraud. Certainly the prize is huge and often very focussed on certain media. For example, the Chinese e-commerce site Alibaba
processes about $650 billion in goods yearly and Amazon
processes about $600 billion of goods yearly, the size of the GNP of many countries. Worldwide purchase volume over mobile devices could exceed $1 trillion yearly within the coming decade in the view of IDTechEx and several other analysts. NFC
-enabled transactions will only get a small share of this over the coming decade but that will still be a big dollar figure.
The very rapidly growing, very large adoption of contactless financial cards will be scarcely dented by NFC-enabled alternatives over the coming decade.
We do not think that NFC
will play a major percentage part in payments and ticketing until near the end of the coming decade or in the Internet of Things
or one of the next big things for mobile phones and tablets - Indoor Positioning Systems (IPS) with the huge array of services they will spawn. In particular, in payment and ticketing, NFC gives a poor alternative to the much loved contactless smart card in some respects. These include having to search because the sensors are in different positions in different NFC phones. There is often a need to have a charged battery
in many cases because even though the phone may emulate a card when switched off it takes some background power to do so in many designs. Indeed many PIN
card schemes require the phone to be on, the PIN entered and the card selected before the transaction. Then there is the need to change user behaviour and the unreliable nature of the devices (discharged batteries
, electronic and electrical failures) so you are likely to carry the other payment media anyway. Add to that the speed-of-transaction problem with some solutions. Electronic wallets not using NFC are favoured over NFC ones for many good on-going reasons. NFC will be a delight to many when used for non-financial purposes such as swapping photos phone to phone. How that makes money for someone is less clear.
We believe that sensor fusion - using many sensors and instruments in a device to create more than the sum of the parts - is something of which NFC
will be a part.
This enabling technology NFC
could not be widely used, generating major earnings from services, until it was widely deployed in NFC enabled devices. The excellent news is that deployment reached meaningful numbers of over 100 million NFC enabled mobile phones deployed (in 2012), ten years after Philips
created the basis for the necessary standards. Flagship and mid-range handsets from Samsung
, Nokia, LG
and others controlling 85% of the mobile phone and tablet market already include NFC and Apple
will be a late follower, in our opinion. However, some potential users in the consumer packaged goods and other mass industries are waiting for Apple to join the party before investing strongly. Most Android tablets have NFC. 250-300 million NFC phones will have been sold in 2013 so we have a very dramatic tipping point of deployment here after nearly a decade of waiting.
All key parts of the NFC
value chain are now strongly committed to its success and investing heavily - chip makers, app designers, makers of mobile phones, tablets and other appropriate high volume devices, operators/telcos. Within the coming decade, the number of mobile phones deployed will exceed the population of the world and most will be NFC-enabled.
Transportation and retail contactless payment card systems involve well over one million readers compatible with NFC
, mostly in retail. Now add NFC-enabled mobile phones and similar devices because they act as NFC readers as well. These will add one million to the global population of NFC- compatible readers making it the largest deployment of RFID
readers in the world - say 2 million NFC and NFC compatible readers deployed as soon as 2015 - 10% transport, 40% phones and 50% retail Point of Sale (POS).
We have a rapid transition to smart phones and rapid growth in adoption of mobile phones, all good lead indicators of success with NFC
use of phones, which will be the main application for the next decade. Already smartphones account for over half of the total mobile phone market.
So far, cards, increasingly contactless cards, are greatly preferred for payment, increasing 12% in 2012 to 10 billion on issue, far more than the population of the world. Indeed, the worldwide value of card payments increased 13% to almost $15 trillion in 2012. Something so preferred is difficult to depose with an NFC
mobile phone, the main focus of NFC for the coming decade.
As was true five years ago, opposing interests are still delaying success in most countries. The majority of secure element chips are now embedded in phones, a disappointment for operators wanting it on their SIM. MCX consortium fights retailer interests, seeking to avoid card transaction fees with its own mobile-wallet platform in opposition to the objectives of the telcos/phone operators and card issuers. Against that, major mobile operators have a digital
purse called ISIS.
business models have been tried, almost all of the major trials and rollouts involving financial and access transactions - notably retail payment and transportation access. Questioning of potential NFC users has mainly resulted in indifferent responses, prompting one magazine to write, "What if you have the next big thing and nobody cares?"
Commercial NFC services launched to date have met with relatively poor interest from consumers, including those in South Korea, Turkey, Singapore, the UK and the U.S., the latter with the Google
Wallet. Project organizers in these and other countries face significant challenges, including the need to increase awareness and overcome security worries among consumers and to offer them more compelling non-payment services.
Important milestones in the adoption and use of NFC
2014-2024 are given in the report and some are shown below.
2018 The percentage of all card payments that are e-commerce rises to 10% by volume and 15% by value but the vast majority do not involve NFC. The majority of contactless e-commerce is still physical cards not NFC but compatible. 13.5 million financial cards on issue, mainly debit.
2023 Sensor fusion: NFC extensively used to leverage other devices such as barometers in mobile phones and tablets etc to provide new applications. A large minority of ticketing on the leading mass transit systems is by NFC-enabled mobile phones.
2024 Applications of NFC beyond payments generate billions of dollars in service income yearly. The majority of e-commerce is still card-related not NFC related. 2.6 billion mobile phones and 0.7 billion tablets shipped most having NFC capability. Over four million NFC readers deployed including card readers and NFC-enabled mobile phones and tablets.
There is no killer application for NFC
in sight, meaning one generating large, sustainable and growing new profits in the value chain. Sensibly, there is the beginning of a move away from transactions in NFC trials and rollouts, including otherwise impossible functions and multiple benefits. In the move away from NFC-enabled transactions (though enormous effort is still put into them) it is not yet clear how the other potential uses can generate major income or indeed who in the value chains can benefit the most but exploiting the many advantages of NFC is more intelligent than just emulating a card or a non-NFC wallet. NFC is headed for great success within the decade to come.