Payments Not Driving Increase in NFC-Enabled Handsets

June 20, 2013

Despite a recent report that scaled back mobile payments adoption estimates due to disappointing results from NFC-based mobile payments ventures, the number of handsets shipped with integrated NFC capabilities increased more than 300 percent last year, according to a new report. Berg Insight, a Swedish telecom consultancy, said global sales of handsets featuring NFC reached 140 million in 2012 and will grow nearly 50 percent per year, reaching 1 billion units by 2017.

But, just because NFC phones are available, don’t expect ubiquitous contactless mobile payments any time soon. The company said it will be years before stakeholders agree on business models for payment networks and access to secure elements that store the sensitive user information in NFC-enabled handsets, but that other use cases will be the catalyst for more handsets that include NFC capability.

“It is the sum of many possible use cases for NFC rather than one single killer application that make the technology compelling for smartphone vendors already today,” said André Malm, senior analyst for Berg Insight. “Once developers gain experience with NFC and get access to a larger installed base of compatible handsets, we can also expect to see entirely new use cases not yet imagined.”

Berg Insights did say that the infrastructure for NFC mobile wallet services is growing, just not at the breakneck pace media reports have been predicting for some years.

Lars Kurkinen, telecom analyst at Berg Insight said: “With the exception of a few projects in Asia-Pacific, there are only three NFC mobile wallet services in the world that have an effective addressable market of more than 100,000 people. These three services are Google Wallet and Isis in the U.S. and Turkcell Wallet in Turkey.”