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Merchant deployment of NFC terminals to see sharp increase

Published

June 6, 2012

Don't look now, but more merchants may be ready for NFC than previously thought. A new report issued by Swedish research firm Berg Insight found that the worldwide market for NFC-ready POS terminals exploded last year.

Annual shipments doubled to an estimated 2.5 million units worldwide in 2011, the company said, driven by the accelerated rollout of an NFC-ready payment infrastructure ahead of the arrival of NFC-based mobile payment services.

According to Berg Insight's predictions, the global installed base of NFC-ready POS terminals will grow at a compound annual growth rate (CAGR) of nearly 50 percent from 3.9 million units in 2011 to 43.4 million units in 2017.

The penetration rate for the NFC POS terminals — that is the percentage of merchants with installed equipment — will increase from 8 percent in 2011 to 53 percent in 2017, the firm said. North America is predicted to have the highest penetration rate by 2017, with 86 percent of merchants using NFC-ready terminals. Europe will follow with a 78 percent penetration rate by 2017. The rest of the world will see penetration rates of 38 percent.

Berg Insight said the emergence of mobile wallets using NFC technologies will spur demand.

"Mobile wallet services will create an unprecedented opportunity for retailers to interact with consumers in real-time while their purchasing decisions are being formed, for instance by delivering personalized offers in real-time while consumers are inside the shop," said Lars Kurkinen, telecom analyst at Berg Insight.

Kurkinen said that value-added services such as loyalty cards and daily deals will still need to be integrated at the point of sales terminal to give consumers a seamless shopping experience.

Additionally, Berg Insight said that NFC transactions in non-retail settings will also grow.

"In the parking market a growing share of transactions are initiated from mobile phones instead of parking meters. This development is pushing major parking meter vendors to diversify into the pay-by-phone parking market," said Kurkinen. Addiionally, he said SMS-based payments for vending are gaining traction in Europe.

For more stories like this, visit the Trends/Statistics research center.