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Beyond the Transaction: Every Transaction Has a Story

2015: The Year of NFC?

Technology watchers famously predicted that 2013 would be a banner year for near-field communication or NFC, and it would be the year NFC-enabled mobile payments would take over at the checkout counter.

They predicted that on-the-go customers would overwhelmingly tap or wave a smartphone in front of a contactless NFC payment terminal, perhaps enter a pin, and the wireless transaction would be done – making checkouts faster and easier and carrying plastic cards and wallets obsolete.

The predictions were wrong – or rather, premature. Back then, there were not enough NFC-enabled smartphones on the market – Apple was absent altogether. Acceptance was limited and the model required cooperation between mobile network operators (MNO) and banks. User experience was also poor, as to use a mobile wallet often required people to apply for a new account, and pay for a new SIM card.

NFC contactlessNow that’s all changing. The market and consumers may finally make 2015 the “knee of the curve” year of NFC.

Last year’s release of Apple Pay gave a huge boost to NFC technology. Finally there is an NFC solution for iPhone users. At the same time, Host Card Emulation (HCE) for Android has eliminated the need for banks to have agreements with MNOs regarding the use of SIM chip to store payment application and credentials.  These two factors are major developments which contribute to higher adoption of NFC-enabled payment platforms from the banks, retailers and payment companies.

Markets like Australia, Hong Kong and Singapore have definitely grown in terms of market acceptance and many consumers are excited to checkout at the register with their mobile devices. We are seeing more merchants show interest in upgrading their POS systems to terminals that are NFC-chip compatible to accommodate mobile payments – which would make payments and checkouts easier and safer for consumers.

However, adoption for Apple Pay, and NFC payments in general, will take time as fundamentally it is an alternative to existing card payments, only done instead, with a phone. While this excites some people, it doesn’t excite a lot of others. Much system and infrastructure work needs to be put in place to get it out to consumers. Consumer education is also needed to help them understand and know how to use it. It is expected that Apple Pay will bring a richer consumer experience in their next release, which will make more people keen to adopt.

There’s no going back and this is the start of a big wave of mobile contactless payments. MasterCard has been a pioneer of mobile commerce innovation for years – as witnessed by the leadership role we played in tokenization and cloud based payments.

As global mobile commerce continues to flourish, innovations such as Apple (and Samsung) Pay, Google Wallet, Square, and Softcard demonstrate the ability to significantly transform the mobile payment space. More and more, consumers will want to tap their smartphones against NFC-enabled readers – and MasterCard will continue to deliver on making checkouts faster, easier, and more secure than ever.

Do you think 2015 will be the year of NFC? Let us know by leaving a comment below.

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