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Juniper Research says NFC retail payments will exceed $180 billion by 2017

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July 23, 2012

Fresh new statistics published today by Juniper Research reveal that the global NFC retail payments market will exceed $180 billion by 2017, more than a seven-fold increase over this year. And for 2013, growth will accelerate faster than for this year.

The leading regions of North America, Western Europe and Far East & China will contribute about 90.2 percent of this market value, as smartphones with NFC payment technology become standard throughout the wireless industry.

Juniper also found that last year was a record year for NFC payments. Major technology infrastructure standards were finalized, many mobile network operators committed to the market and NFC payment pilots from both mobile operators and financial institutions transitioned to commercial service.

NFC-enabled smartphone models were announced by almost all mobile handset makers and Google ignited the market by launching its Google Wallet in the United States.

But the report cautions market observers that the market acceleration of 2011 revealed some parts of the ecosystem unprepared for the future. In particular, retailers are less convinced of the benefits of NFC payments over existing card technologies and are unwilling to invest in contactless infrastructure so soon after the transition to Chip & Pin.

Education and win-win propositions from other ecosystem players are also necessary to make retailers as committed to this opportunity as themselves.

According to report co-author Dr Windsor Holden "This is a critical time for the NFC retail payments market. Despite the significant progress being made today, the full potential of the market can only be fulfilled if all ecosystem players are equally committed and mobile wallet technology remains in place."

"Our report analyzes the various consortia models being formed today and which types are expected to endure,” added Holden.

Other findings from the report include:

  • About 26.8 percent of mobile users in the U.S. and Western Europe will pay in-store using NFC by 2017
  • Mobile network operators can offset declining ARPU as they commit to NFC-based payment projects
  • The NFC mobile payments with no contact required whitepaper is available to download from the Juniper website together with further details of the study ‘NFC Mobile Payments & Retail Marketing: Business Models & Forecasts 2012-2017’.

    Juniper Research provides research and analytical services to the global hi-tech communications sector, providing consultancy, analyst reports and industry commentary.

    In other mobile news

    Qantas Airlines says it will provide an iPad to every passenger on its fleet of Boeing 767s, in an effort to beam free in-flight entertainment using what it calls its Q-Streaming technology.

    Qantas CEO Lyell Strambi says "Following the successful trial of our Q-Streaming service this year, we will partner with Panasonic and utilize their eXW solution to provide over 200 hours of on-demand in-flight entertainment content via Apple's iPad to every passenger in Business and even in Economy travelling on our Boeing 767 fleet."

    The project has been in the making since last year.

    Panasonic's new eXW technology, to which Strambi referred to as the company's Avionics Division's in-flight entertainment and communication (IFEC) system, was introduced last September. And Panasonic will soon offer its technology to other airlines as well.

    One eXW Wi-Fi system can offer up to forty full-length films and one-hundred short subjects, enough music to fill 100 audio CDs, digital newspapers and magazines, and cached web content, Panasonic said.

    Strambi was apparently pleased with the results of the testing of eXW. "Our passengers were the first in the world to experience the new Wi-Fi entertainment technology, and we've received great feedback from our customers during the trial this year," said Strambi.

    This is the latest straw in an ongoing war between Qantas and Virgin Australia, according to observers in the airline industry. The two companies have been battling agressively for new customers, and this can only be seen as an escalation of the war between them.

    The QStreaming tech was tested in a trial run beginning in September 2011. To be sure, Qantas seems to have outclassed its competition with its new service. Virgin Australia is also testing its own tablet-based in-flight entertainment system, but it merely preloads Samsung Galaxy tablets with some content, and it plans to provide them free to business class passengers only, and to charge economy class flyers for the privilege, something that Qantas wants to avoid at all costs.

    The first iPad-equipped Qantas Boeing 767 will pick up passengers in the fourth quarter of 2012, and will fly predominantly east coast routes, plus all the way across Oz from the east coast to Perth, about 2,000 miles to the west of Sydney.

    Such a nonstop flight typically takes about five hours-- more than enough time to sit, relax and enjoy an iPad and the content that Qantas new provides its passengers.

    In other mobile news

    Apple says that the new beta versions of its iOS 6 operating system restricts the number of mobile apps that you can have installed on your iPad, iPhone or iPod touch-– a limitation that didn't exist on iOS 4 or iOS 5. It's still not clear if that will be just for the beta version or if this will be permanent in iOS 6.

    But the limit is high enough that only the most app-crazy owners would be annoyed. Once your iOS 6–equipped iDevice has over 500 apps installed on it, you will begin to experience slow booting, auto-rebooting, and other issues.

    Exceed 1,000 apps and your iPhone or iPad won't even boot at all. You'll be forced to restore it to factory default settings.

    Of course, 500 to 1,000 apps may seem to be far more than any rational user might keep on their iOS device. But as some may point out, if Apple expects your iPhone to eventually replace your phone, your pocket gaming system, your smart-home remotes, your TV remotes, etc, it might want to reconsider the limitation.

    Which it might in fact. Apple representatives say that the company will address the issue. The fix will come as welcome news to app devotees of iOS, which as of yesterday numbered 739 for the iPhone alone. That's down from the 856 apps we found in the iTunes App Store when we last checked in May of last year.

    In other mobile news

    Verizon Wireless, AT&T and T-Mobile USA formed a new consortium in November of 2010 called ISIS, and the group will soon start testing its mobile-payment service next month, according to a person familiar with the launch plans.

    A representative for ISIS couldn't give us a specific date, but did say that the service would begin trials in Salt Lake City and Austin, Texas. We should be able to get a date sometime next week.

    ISIS will join Google Wallet in its attempt to get people to start paying at cash registers with their smartphones instead of a credit card or cash. Unlike Google's initiative, which launched last year amid a lot of fanfare, ISIS has taken a slower approach, building up a wider number of partners, including retailers, payment networks, and banks, in an effort to offer consumers more options when signing up.

    The sluggish pace at which ISIS has moved and the lack of adoption on Google Wallet's part clearly highlight the issues of shifting consumers away from their entrenched method of payments.

    Both ISIS and Google see an opportunity to layer additional services on top of smartphone payments, including digital receipts, coupons, and targeted advertisements based on purchases.

    Wireless Industry News did a field test of Google Wallet in May and found it difficult, and at times awkward, using the service. ISIS hopes it has a smoother rollout with its limited deployment. The venture will launch with Android and BlackBerry smartphones equipped with near-field communications chips, which enable the phones to make mobile payments at upgraded cash registers.

    ISIS will also offer sleeves with NFC chips for iPhones, getting around its lack of NFC. ISIS declined to comment about the different phones it would launch with, deferring to the wireless carriers.

    A few BlackBerrys already come with NFC chips. Also, the newly released Galaxy S III has an NFC chip in it as well. Verizon's Galaxy Nexus has one too, but its Google Wallet feature remains disabled by the carrier.

    Sprint also offers the Galaxy Nexus, but it isn't part of ISIS however. Instead it will align itself with Google. It too may consider an alternative.

    To be sure, ISIS has a different business phisolophy than Google does. It plans to remain a neutral partner to banks and payment networks, only charging companies to run on its platform. That's a change from its initial 2010 strategy of attempting to take a percentage of each transaction, which the financial companies didn't like.

    Google wants instead to maintain the customer data for its utilization in delivering mobile ads and recommendations. ISIS doesn't keep or even look at personal user data-- it's simply not its modus operandi.

    ISIS president Michael Abbott says that five months ago, the consortium was holding a massive education campaign to alert merchants and consumers about its new payment service. Along with a different range of phones, it will also work with payment networks Visa, MasterCard, American Express, and Discover, as well as credit card issuers BarclayCard, Capital One, and Chase.

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    ISIS has yet to talk about exactly when it plans a broader launch, but for now it remains focused on getting the service and technology right, hence the testing of its platform that will start sometime in August. We will let you know when we get a firm date from ISIS.

    In other mobile news

    According to the Organization for Economic Co-operation and Development (OECD), when compared to traditional land-based broadband, the trend to wireless internet connectivity has been increasing a lot in the last year and will continue.

    The OECD's latest numbers assert that its 34 members collectively used 314,857,679 wired broadband connections, and 667,400,934 wireless services, as of December of last year.

    But growth in wired connections has slowed to just 1.8 percent across the OECD segment, for the six months to December 2011 measured in the study. Wireless connections, by contrast, grew by over 13 percent.

    Wired connection penetration into business and homes was flat across the OECD. The report offers an analysis of overall broadband penetration compared to gross domestic product. The analysis reveals that many broadband users do not necessarily translate into a larger GDP.

    This doesn't take into account other factors that contribute to GDP growth. The data also demonstrates the existence of a Hungarian internet service provider which offers a broadband product which, thanks to a five-terabyte download allowance at a speed of just 10 MBPS, cannot ever reach the download quota.

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    Source: Juniper Research.

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