Financial Technology

Financial Technology

October 25, 2011

Global Shipments of NFC Chips to Exceed 1.2 Billion by 2015: Report

Near-field communication chips – used primarily to power mobile payment software – will find their way into the majority of smartphones and other Web-enabled device within the next few years, according to new research.

The folks down at In-Stat (News - Alert) have speculated that the growth of the mobile payment industry – along with declining technology costs – will help push global annual shipments of NFC chips to over 1.2 billion by 2015. Within the next four years, the technology is expected to reach 30 percent global penetration.

"As the costs of NFC chips decline, and NFC radios are combined with other chip functions, the cost to integrate NFC into handsets will be outweighed by the benefits," Allen Nogee, Research Director at In-Stat, noted in a statement. "The growth of combo chips will also allow NFC radios to piggyback on technology that already has significant penetration in the market."

The forecast is especially bold considering the meager number of NFC-enabled smartphones that are on the market today. So far, Samsung (News - Alert) is the only handset manufacturer to delve deeply into this market, powered mostly by their relationship with Google, which is pushing its Google Wallet as the next big thing in mobile payments. Nokia (News - Alert) has also developed a small presence in the market.

So the reason for the lofty forecast is not the present market, but rather what can be expected moving forward. The three major U.S. carriers – AT&T, Verizon and T-Mobile (News - Alert) – have joined forces to create a mobile payment joint venture called Isis, which recently inked agreements with Visa, MasterCard (News - Alert), Discover and American Express to develop "mobile wallet” software that allows smartphone owners to make point-of-sale purchases by simply waving their device over scanners.

Research firm Gartner expects the market for mobile payments to increase to more than $1.1 trillion by 2014, up seven fold from current numbers.

Obviously, initiatives like Isis and Google Wallet will rely on NFC-enabled smartphones to get off the ground. The fact that Google is the maker of Android, the biggest mobile operating system in the world, will surely help increase market penetration to level expected by In-Stat.

In addition to mobile payments, NFC chips are expected to become integral parts of tomorrow's marketing applications, where retailers incorporate smart posters into their signage and outdoor advertising strategies, according to In-Stat. The research firm speculates that retailers will begin to look toward NFC-based advertising during the course of the next year.

Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves


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