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BizReport : Mobile Marketing : October 30, 2014

Apple Pay, HCE to drive NFC-based contactless payments

Host Card Emulation and Apple Pay will be the key drivers of NFC mobile payments this decade, according to a new forecast released by Juniper Research that pegs the number of NFC users come 2019 to be around 516 million.

by Helen Leggatt

By 2019 the number of mobile owners using NFC-based contactless payment services will rise fivefold from the expected 101 million in 2014 to 516 million, forecasts Juniper Research in their recent 'Getting in Touch with NFC'.

Two factors will drive the growth - the take-up of Apple Pay launched earlier this month and Host Card Emulation (HCE) technology that emulates a payment card on a mobile device using only software and accessed via cloud servers.

Other findings from the report include:

- Three-quarters of smartphones worldwide will contain an NFC controller chip by the end of the decade;

- While NFC can offer retailers a strong value proposition in terms of customer retention and loyalty opportunities in addition to payment, most retailers remain unclear as to its tangible benefits.

The take-up of Apple Pay and HCE would threaten mobile network operators, says Juniper, as the Apple solution has the secure element embedded within the handset and with HCE the secure element no longer needs to be physically present in the handset.

"We would envisage that while NFC deployments and consumer activity will be buoyed by these developments, the opportunities for network operator involvement are limited," observes Dr Windsor Holden, head of consulting and forecasting at Juniper and author of the report. "Hence we are likely to see more operators re-evaluating their existing commitments to NFC and possibly withdrawing from the space."

Image via Shutterstock

Tags: mobile, mobile payments, retail, trends

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