A recent report published by Transparency Market Research predicts that the worldwide near field communications (NFC) market will grow to $20 billion in 2018.
The payment industry is one of the major drivers of this growth. The magnetic strip technology that has been used on cards for years is easy to counterfeit and has resulted in rampant fraud. As a result, the credit card industry has created a new standard known as EMV that uses embedded chips in cards to store card data.
U.S. businesses that accept credit cards have been given an ultimatum: either start using EMV-compliant payment terminals by October 1, 2015 or risk being responsible for covering fraud charges. Needless to say, this has created a spike in demand for POS devices that support the new standard, like Apple (News - Alert) Pay.
The proliferation of mobile devices that support NFC will also be a huge influence on the payments industry. According to Business Insider, nearly 300 million NFC-capable phones shipped in 2013. In the U.S. alone, in-store payment volume will balloon from $1.8 billion in 2013 to $189 billion in 2018, a CAGR of 154 percent!
NFC technology will be useful for other technology besides making payments. Since the chips and tags that it communicates with can be embedded or attached to almost anything, the possible applications are limitless.
Anything that uses a lock, whether it’s the door to your car, its ignition or the front door at your home can be tagged and unlocked using a smartphone with NFC. Lockitron already provides keyless entry solutions that support NFC-enabled smartphones.
It seems unlikely that these predictions about rapid growth in the NFC market won’t reach their forecasted levels. In the payments industry alone, the pressure is too great for merchants to upgrade to EVT POS terminals, that not upgrading would put many of them out of business.
The sky is the limit as far as non-payment applications of NFC goes too. The only remaining question may be whether the industry analysts were too conservative in their predictions.
Edited by Maurice Nagle
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