The growing focus on mobile commerce from global businesses such as Google, France Telecom Orange and O2 parent firm Telefonica is fuelling demand for near-field communication (NFC)-capable smartphones, a new report reveals.
Juniper Research suggests that one in five smartphones will have an NFC contactless facility by 2014, meaning there will be almost 300 million handsets offering the technology.
The NFC Retail Marketing & Mobile Payments Report also indicates that the growth will be driven in the short term by mobile network operators launching NFC-capable services in 20 early adopting nations before the end of next year.
A number of retailers in the UK have trialled contactless technology in their stores over the last year, including the country’s fifth largest grocer Co-op and convenience store giant Spar, with companies seeing the technology as a way of reducing queuing time and increasing security at the point of sale.
Later in 2011 telecommunications specialist O2 will launch a mobile wallet payment application that supports NFC, and the company is seeking an e-money operating licence from the Financial Services Authority, which would open the way for peer-to-peer money transfers.
In an interview with Retail Gazette last month, Head of Financial Services at O2 James le Brocq explained how retailers and consumers will be able to benefit from contactless technology, whether it is built into phones or used on bank cards.
“The removal of cash will reduce the need for security and the cash-carrying cost, while shoppers will be able to collect and redeem loyalty points using a mobile,” he explained.
“If you imagine the whole checkout experience I think there are a number of ways that it could be speeded up by contactless technology.”
Juniper Research’s report warns, however, that business model structures still require development before NFC services are able to achieve critical mass.
It also predicts that North America will account for 50 per cent of all NFC-enabled smartphones in 2014, with Western Europe the second largest adopter of the technology.
Author of the research Howard Wilcox said: “Juniper’s market analysis highlighted that, although there are still hurdles ahead, NFC prospects have been boosted by the succession of mobile operator and device vendor announcements.
“France is a case in point where operators expect to sell one million NFC devices this year.”