SAN FRANCISCO—Boosted by support from heavyweight wireless players Nokia Corp. and Google Inc., use of near field communication (NFC) in handsets is poised to begin an explosive growth phase next year, according to market research firm iSuppli Corp.
Worldwide shipments of cell phones with built-in NFC capability are projected to rise to 220.1 million units in 2014, up by a factor of four from 52.6 million in 2010, according to the latest forecast from iSuppli (El Segundo, Calif.), a unit of IHS Inc. By 2014, 13 percent of all handsets shipped will integrate NFC, up from just 4.1 percent in 2010, according to the forecast.
Jagdish Rebello, director and principal analyst for communications and consumer electronics at iSuppli, predicted a "mobile payment revolution" enabling a growing number of users to pay for things by holding a cell phone near a wireless terminal. "With NFC technology expected to be integrated into Nokia's cell phones and Google's Android operating system, the first shots of this revolution will be fired next year."
Nokia has said that starting next year all of its smartphones will incorporate NFC. Google and NXP Semiconductors NV announced earlier this month a strategic collaboration to integrate NFC into the latest version of the Android operating system, which is set to be released this week.
Some have suggested that NFC for mobile payment may have trouble catching on in some parts of the world, including the U.S. But Jeff Miles, director of mobile transactions for NFC-pioneer NXP, said the technology is poised to take off because it can be used for applications in addition to mobile payment—including peer-to-peer gaming and targeted advertising—and because it leverages a "pretty significant contactless payment infrastructure that is already out there."
Miles added, "We believe right now that NFC is a technology that is going to pay off because it's not one dimensional."
ISuppli noted that the three largest U.S. mobile phone carriers—AT&T Wireless, Verizon Wireless and T-Mobile—recently launched a joint venture known as ISIS that will develop a mobile payment system based on NFC. While ISIS is initially working with Barclaycard U.S. and Discover Financial Services, the carriers said they are open to collaborating with any bank or credit card company that would like to use the platform, according to iSuppli.
ISIS within the next 18 months hopes to have NFC-enabled cell phones sold by the three carriers and an NFC ecosystem in place in some regions of the U.S., with a full nationwide rollout slated to be accomplished by 2013, iSuppli said.
"ISuppli believes that 2012 will be the make-or-break year for NFC," Rebello said. "With all the ongoing and planned NFC trials in different regions of the world—as well as support for the technology by major stakeholders, including wireless operators, financial institutions and banks—it is imperative that business models be established that allow each of the nodes to see value in offering the service."
ISuppli noted that NFC chips are compatible with contactless smart cards. Devices that are NFC enabled can be used as access devices for secure facilities, such as office buildings and gated apartments and can work as information retrieval devices, the firm said.
ISIS will play important role in creating the ecological system that can enable the consumers to actually use NFC. As many banks and the credit card companies becomes part of this organization and invest in this system the things will be in place very quick.
The use of NFC will definitely increase, but in the US a lot more payment infrastructure using NFC will have to be in place for it to become popular.
Any RF form of NFC is still open to possible snooping and information theft, unless the RF can be tightly contained. While contactless use is the most convenient, the only secure way of transferring the data involved would be by a shielded transfer area or box rather than an open receptor plate.