Network operators must partner on NFC or miss out on $100 billion payments opportunity

Near field communication (NFC) mobile payments will soon become a reality in the US and Western Europe, and mobile network operators must get in on the act or miss out on big potential revenues, stated ABI Research.

Despite commentary from other analyst firms that resign NFC payments to a hype-driven phenomenon, ABI Research predicts that these payments will soon become not only a reality, but also a mass market-adopted behaviour in the US and Western Europe, as soon as 2016.

“Despite the lack of definitive announcements to date, mobile network operators and OEMs will flood some markets with NFC payment-ready smartphones in 2012 and 2013. That, along with momentum from Google Wallet and several other MNO-led initiatives, like Cityzi in France, ISIS in the US, and the yet unnamed MNO JV in the UK, builds the installed base of NFC mobile payment users to more than 16% of mobile subscribers in the US and Western Europe by late 2014,” said Mark Beccue, senior analyst for mobile money at ABI Research.

Total dollars spent worldwide using NFC will surpass $100 billion in 2016, a relatively small amount compared to the tens of trillions of overall annual consumer spending. However, Beccue noted: “$100 billion is a healthy amount for an emerging payment initiative, especially when you consider it will have existed for less than four years in 2016.”

Business models, not technology, continue to bog down the near-term progress of NFC mobile payments, but perhaps those days are coming to a close, Beccue commented. “With these new business models, the opportunities are too good to pass up. MNOs, OEMs, and Google are tinkering with multiple business and partnership models and will most likely use a combination of one or more. This approach will help move the business forward.”

ABI Research’s new report, NFC Mobile Payments, forecasts the installed base of NFC handsets, active NFC mobile payment users, and NFC mobile payments by region and selected countries. The report also presents details of evolving consumer behavior and use cases for NFC mobile payments.