Yesterday, Gartner presented a picture of a $172-billion mobile payments industry that is still largely based around older technologies like SMS and web-based payments, with newer services like NFC chips playing a very marginal role. Today, Juniper Research paints a more encouraging picture for NFC: It says in a new report that one in four consumers in the U.S. and Western Europe will tap, wave and hover NFC-enabled handsets at points of sale to buy goods by 2017. But it also notes that today the number of transactions made on NFC phones in those regions is less than two percent.
The news comes on the same day that PayPal has started to ramp up its mobile payments push internationally — without NFC. The eBay-owned payments company today began the UK launch of a retail mobile payments app for iOS and Android devices, PayPal InStore. The clothing chains Coast, Oasis, Warehouse, and Karen Millen are the first to sign on.
PayPal InStore is currently not powered by NFC — a user creates barcodes for payments using the app and then these get scanned by the cashier, and then deducted from a users’ PayPal account.
The question is whether the door is open for the app to be upgraded to NFC when the chip technology is more ubiquitous — it would certainly make sense, given that it would speed up use of the service.
PayPal last week expanded its mobile payment services in the U.S. by adding 15 more major retailers to the list of those supporting the payments company. In the UK, the company has a headstart with its branding: as TNW points out its main mobile app broke the 1-million user mark as far back as 2010.
PayPal has been looking at a number of different technologies to enable mobile payments. It has trialled NFC, launched a dongle-based service called Here, and looked at ways of using pin codes and credit cards to complete the payments from users’ PayPal accounts. As for PayPal InStore, the Inquirer notes that Windows and BlackBerry versions are also under development.
Meanwhile, Juniper’s NFC projections, in contrast to Gartner’s, are significantly more optimistic not just about how much NFC will be used, but also about how much money will be generated from NFC.
Juniper’s principal analyst, Windsor Holden, believes that there will be $180 billion in mobile NFC transactions by 2017 — just $8 billion more than Gartner believes will be made in mobile payments overall this year. Gartner says that the total transactional value for all kinds of mobile payments will be $617 billion by 2016.
One area where both analysts seem to agree is on the complexity and challenges in making NFC work. Chief among them is that there are a number of parties involved in enabling payments — mobile operators, handset makers, payment providers, retailers and banks — and as Juniper points out a “single point of contact to take responsibility” will be needed to make these services gain credibility with users.
So far, we’ve seen a lot of efforts, including Google Wallet, the Isis consortium, and several commercial projects in Europe (eg, France Telecom working with Visa) — but no clear leader in NFC emerging out of all of that.