Device-based NFC payments to reach $124.3bn in 2018

The global value of mobile and wearable contactless payments is on track to grow to US$95 billion ($124.3 billion) annually by 2018, from less than US$35 billion in 2015, according to Juniper Research.

In a new report, the research firm predicts that payments using devices supporting near field communication (NFC) will get a boost from the emergence of the connected wearables segment.

Smartwatches and wristbands are expected to drive this growth. Nearly 9 million Apple Watches were shipped by the end of 2015.

But the report notes that these numbers are dwarfed by sales of NFC-capable iPhones and other smartphones.

As a result wearables as a whole are not expected to account for more than 2% of the total value of non-card contactless payments in 2018. It will take several years for wearables to achieve critical mass, the report adds.

Several vendors are following in the footsteps of Apple with Apple Pay and embedding secure contactless payment elements within the smartphone.

Samsung is as yet the only other vendor to launch its own-brand contactless payment service, but fast-growing Chinese handset vendor Xiaomi has filed patents for its own such service.

Unfortunately for mobile network operators, such moves by vendors are further cutting them out of the contactless payments value chain, according to Juniper Research Head of Research Nitin Bhas.

“Most operator-led pilots and commercial ventures have now closed down,” he said. “Apple’s entry into NFC gave the industry a much-needed boost and could well be seen as the tipping point for the technology, but at the same time it sounded the death knell for the mobile operator projects.”

Image courtesy of Shinya Suzuki under CC