NFC-based based mobile payments are gradually gaining prominence in Germany with consumer preference for secure payment services also gaining ground, according to a research report from U.K.-based firm Timetric.

According to the report, mobile penetration witnessed healthy growth during the review period, rising from 128.3 percent in 2010 to 134.3 percent in 2014. One of the primary reasons for growth in smartphone use is the availability of 3G and 4G connectivity. Growing preference for smartphones, especially among the young population, is anticipated to further drive mobile penetration, which is expected to reach 143.4 percent in 2019.

"Mobile payments based on contactless technology are becoming popular, and banks, mobile operators and retailers are gradually embracing this technology to benefit from mobile payment market expansion," Timetric analyst Kartik Challa said in the report.

To meet the growing demand for contactless mobile payments retailers in Germany are installing the necessary POS terminals thanks to industry partnerships, Timetric said. In April, Vodafone Germany, Deutsche Telekom and Telefónica, along with six major German retailers, launched a program in Berlin to introduce contactless POS terminals. Under the program, 2,000 POS terminals across 500 retail outlets will be upgraded to accept mobile contactless payments.

MasterCard last year announced a collaboration between Deutsche Telekom, Telefónica Deutschland, Vodafone and MasterCard subsidiary Trevica to offer mobile payments for customers of MasterCard partner banks. The service enables banks to connect to a single platform instead of individual mobile operators. Similarly, Vodafone introduced its mobile contactless payment service, SmartPass, for Android phone users in March 2014. Volksbank introduced mobile payments in August 2014.

"Such initiatives by banks, mobile operators and retailers are expected to further drive mobile contactless payments and serve the rising consumer preference for secure payments," Challa said.