Near field communication (NFC) technology allows the transfer of data between two NFC-enabled devices. Most people know about this relatively new tech from the MasterCard PayPass, which allows users to pay by simply tapping their MasterCard card on a NFC-enabled POS device.
But NFC technology is catching like wildfire across the board, with Android users around the globe devising more and more ways to take advantage of NFC chips, tags, and related apps.
The seemingly endless possibilities of NFC stretch well beyond retail transactions, and uptake among consumers has been impressive enough to drive market growth at a CAGR of 91.4 percent from 2014-2018.
TechNavio analysts have whittled down a few trends in the Global NFC Chips Market that are really pushing market growth:
- Increasing NFC-based Transactions
- More Vendors Entering the Market
- Rapid Development of the NFC Ecosystem
- Emergence of Mobile Wallet
Increasing NFC-based Transactions
NFC for a variety of personal uses, from controlling WiFi to programming and automating your workout is the new ‘thing’, but financial transactions are still the backbone of NFC—case in point, the success of the MasterCard Paypass. Sectors as broad as transit, BFSI and retail use NFC-specific applications through NFC devices for their business operations. Another prime example is the tap and pay initiative by Google Inc. (which has attracted various participants such as NXP, Samsung, Citi Group, MasterCard, and Verifone Systems from the NFC ecosystem), which requires vendors to ensure that their end-users are provided with numerous applications related to NFC technology.
More Vendors Entering the Market
It may seem obvious, but more demand for NFC technology means more vendors are entering the market, which has a positive impact on market growth. Currently, NXP Semiconductors dominates the market, holding approximately 75 percent market share in 2013. The company’s high-performance NFC ICs support almost all the smart card standards operating in the market, guaranteeing them a strong customer base. However, there are other vendors continuously focusing on strengthening their foothold in the market and acquiring more customers. The increasing number of vendors will tend to increase the concentration, and will also compel the development of NFC infrastructure, which will propel the growth in the market.
Rapid Development of the NFC Ecosystem
The NFC forum has been continuously trying to improve the NFC ecosystem by bringing in more participants to improve the overall NFC infrastructure. For instance, an NFC venture titled Quick Tap was launched in the UK in 2011 by Barclaycard, MasterCard, Samsung, Gemalto, and Orange. The venture was a huge success with participation of around 50,000 merchants and retailers from across the country. Similarly, many such initiatives are being witnessed across the globe with the sole aim of developing the NFC ecosystem.
Emergence of Mobile Wallet
Mobile wallet services allows users to pay for services through mobile devices instead of credit/debit cards or other cashless payment modes. For instance, mobile wallets store the details of customers’ credit cards, enabling them to pay at NFC POS terminals using their mobile phones. This requires high-speed internet and interoperability between service providers and issuers. Mobile wallets are gaining popularity among consumers as one of the most effective means of carrying out mobile transactions. And what’s good for the goose is good for the gander, or in this case whatever makes life easier for consumers will ultimately have financial benefits for retailers.
For more insights, including market drivers, challenges and prominent vendors, view our Global NFC Chips Market 2014-2018 report.
